Family loan gone sour - advice appreciated

jmkgreen

Apologies if this is the wrong forum.

My wife provided a handful of small-amount loans totalling < £10,000 to her sister's husband over the past several years - some really urgent over-the-phone and without agreements. Some of this has been repaid so far but none in very recent years.

Her sister's relationship is now ending and my wife wants the remaining money back. She was advised by other family members there is a seven-year rule based on when the initial loan was made and that she needed to get cracking due to this. We're uncertain the origin of this information.

My wife wrote a letter to the debtor a few weeks ago explaining the outstanding amounts and demanding settlement. A response letter acknowleged and clarified the amount still remaining. My wife wrote back accepting this (roughly £500) as the final amount and warning of court action if payment was not received within 10 days which has now lapsed.

She is now worried about things she has read:

1. That the time limit is 6 not 7 years was the initial loan is provided

2. That since some of the loan has been repaid this will make it more difficult to demand the remainder

3. That some transactions involved his personal bank account, and some his company bank account (sole trader, non-ltd) and this may complicate matters

This evening I discover she's paid an online "expert" for advice and been told the time resets every time there is a repayment or an acknowledgement of the outstanding amount.

I'm no legal expert and I appreciate this may be a really grey area but do we have any pointers to clarify our rights without spending the entire outstanding amount on solicitors?

I appreciate your time in at least reading this!

_Penny_Dreadful

jmkgreen said:

Apologies if this is the wrong forum.

My wife provided a handful of small-amount loans totalling < £10,000 to her sister's husband over the past several years - some really urgent over-the-phone and without agreements. Some of this has been repaid so far but none in very recent years.

Her sister's relationship is now ending and my wife wants the remaining money back. She was advised by other family members there is a seven-year rule based on when the initial loan was made and that she needed to get cracking due to this. We're uncertain the origin of this information.

My wife wrote a letter to the debtor a few weeks ago explaining the outstanding amounts and demanding settlement. A response letter acknowleged and clarified the amount still remaining. My wife wrote back accepting this (roughly £500) as the final amount and warning of court action if payment was not received within 10 days which has now lapsed.

She is now worried about things she has read:

1. That the time limit is 6 not 7 years was the initial loan is provided

2. That since some of the loan has been repaid this will make it more difficult to demand the remainder

3. That some transactions involved his personal bank account, and some his company bank account (sole trader, non-ltd) and this may complicate matters

This evening I discover she's paid an online "expert" for advice and been told the time resets every time there is a repayment or an acknowledgement of the outstanding amount.

I'm no legal expert and I appreciate this may be a really grey area but do we have any pointers to clarify our rights without spending the entire outstanding amount on solicitors?

I appreciate your time in at least reading this!

I don't know where family members are getting this 7 year rule from.  Debts in the UK become statute barred after 6 years (5 in Scotland). This depends on how much time has passed since the start date of the limitation period. That date is which of the following happened most recently:

1. The last time the debtor wrote to the creditor acknowledging that the debtor owes the debt
2. The last time the debtor made a payment to the debt
3. The earliest date the creditor could have started court action

The soon to be ex-BIL has just acknowledged owing the debts in writing so the loans are not statute barred.  The next step for your wife to take would be to look at filing a money claim online, something which does not require the use of solicitors or for her to pay for more of that "expert" advice.

https://www.moneyclaim.gov.uk/web/mcol/welcome

[Deleted User]

I thought only commercial lenders had rules applied to them ?
How can families be regulated ?

missile

How much is she still owed?
If only £500(?) you are fortunate

mcpitman

Families and money rarley mix well.

Did you draw up a loan agreement at the time (and each time) monies were borrowed? Are you a regulated money lender?

If the answer is no, then legally your ex-BIL may well be able to skip off into the sunset.

How much is owed now? If it's £10k probably worth looking into further, if it's the £500 you have mentioned I would forget it.

Ryan_Holden

Tbh it all sounds like it's gone very formal very quickly, presume the relationship with the BIL is not good?

If it's good, why not just ask for a few payments over the next months before going down the whole court/money claim.

It sounds like he's being co-operative if he's acknowledged what he owes.

stuhse

Your wife warned of court action ...and now ten days have lapsed..............she should not have written this if she didnt intend to follow through, as now its just an idle threat and further threats will be futile.  If its only £500 out of £10000 i would just forget about it as it isnt going to be worth the stress.  If you involve solicitors you'll burn another £500 in the first hour.  The fact that he has acknowledged the debt would seem to suggest its on his to do list ?

Bradden

mcpitman said:

Did you draw up a loan agreement at the time (and each time) monies were borrowed? Are you a regulated money lender?

If the answer is no, then legally your ex-BIL may well be able to skip off into the sunset.

I've seen this advice previously from others on MSE and wonder what the basis is? If you lend money to a friend do you have to draw up a loan agreement for it to be enforcable legally?

elsien

Bradden said:

mcpitman said:

Did you draw up a loan agreement at the time (and each time) monies were borrowed? Are you a regulated money lender?

If the answer is no, then legally your ex-BIL may well be able to skip off into the sunset.

I've seen this advice previously from others on MSE and wonder what the basis is? If you lend money to a friend do you have to draw up a loan agreement for it to be enforcable legally?

You have to have some sort of proof Is a loan and not a gift, and also some sort of proof of what was actually lent. 

Handing  over a grand in cash and all done verbally with no witnesses, you can kiss that goodbye. 

Bradden

elsien said:

Bradden said:

mcpitman said:

Did you draw up a loan agreement at the time (and each time) monies were borrowed? Are you a regulated money lender?

If the answer is no, then legally your ex-BIL may well be able to skip off into the sunset.

I've seen this advice previously from others on MSE and wonder what the basis is? If you lend money to a friend do you have to draw up a loan agreement for it to be enforcable legally?

You have to have some sort of proof Is a loan and not a gift, and also some sort of proof of what was actually lent. 

Handing  over a grand in cash and all done verbally with no witnesses, you can kiss that goodbye. 

Thanks.. would a text message or email confirming the amount borrowed suffice rather than a loan agreement as @mcpitman seems to suggest? 

Grumpelstiltskin

I'm sure that if you had an email from the person you lent the money to saying 'Dear Bradden Thank you very much for lending me the £1000 you sent me last Saturday, I am very grateful for the loan. I will repay you at £50 each month I will send you the first payment at the end of this month when I get paid Yours xxxxxxx' Then you could produce that. The chances of that happening I guess are virtually nil.