Lending money to friends & family

GDB2222

martymcauley wrote: »

Hi, I am sure that this has probably been discussed in this thread somewhere but it is rather huge and I would struggle to go from one end to other without jumping off a bridge. I am wishing to buy a house that is, what I consider, a bargain. Have had it checked and it seems fine. My friend has offered to lend me the money , interest free, to purchase it before I sell my own. The house needs some fairly major cosmetic work :windows doors eplaced etc so isnt just ready to move in. Is there any tax implications if he loans me the money for a few months till I sell my own? It is temporary and interest free.

Nope, no tax implications if it is interest-free.

nelly12

My best mate rings me up saying he needs to see me urgently for some advice. Intrigued I invited him round. His wife came with him and before they'd sat down they were both in tears.

Turns out two things are happening. Financially they have gone from bliss 10 years ago to destitution. Now I can help them sort through their financials with the various institutions they owe money to but....

2 years ago he borrowed £20k from a friend (who I don't know), there was nothing in writing and the proposed timescale for repayment was 3 to 6 months. The only correspondence has been verbally or by text. Friend admits he has made a lot of false promises about extending his mortgage to get the money, trying to get a loan and failing and selling a buy to let property that has I believe only got £10k equity. Their own house is most definitely in neg eq. Apart from the lies I'm inclined to think that the person who lent them the money has been majorly naive in not putting anything in writing. The person who lent the money is engaging a solicitor this week he has said. Questions are:

Couple have no assets, what would happen if it went to court?

Can the lies verbally and by text used against them?

Clearly they have always intended to pay this money back and unfortunately have hit bad times.

What are peoples thoughts on this? (legally not morally please) Thanks.

gb12345

nelly12 wrote: »

Couple have no assets, what would happen if it went to court?

If the judge found against them then they would get a CCJ, which could be enforced by bailiffs taking their possessions, but as they are unlikely to have £20k+ of possessions, what will probably happen is that the judge will determine how much they can afford to pay each month.

One thing that doesn't ring true through it that you say they have no assets, but also mention a BTL property with £10k equity - that is an asset.

nelly12 wrote: »

Can the lies verbally and by text used against them?

Verbal lies are probably not going to be much use to the other party in court as there is no evidence. The texts could well be used and could make the other party's case stronger. In particular if he has texts from them saying they will pay back, then this will be an acknowledgement that the money was a loan.

nelly12

gb12345 wrote: »

If the judge found against them then they would get a CCJ, which could be enforced by bailiffs taking their possessions, but as they are unlikely to have £20k+ of possessions, what will probably happen is that the judge will determine how much they can afford to pay each month.

One thing that doesn't ring true through it that you say they have no assets, but also mention a BTL property with £10k equity - that is an asset.



Verbal lies are probably not going to be much use to the other party in court as there is no evidence. The texts could well be used and could make the other party's case stronger. In particular if he has texts from them saying they will pay back, then this will be an acknowledgement that the money was a loan.

Thanks for the reply, I meant no assets as in their debts sound like they could be in the region of £50k and that's not including the £20k.

if they were to decide on bankruptcy can the £20k be included in this as there's nothing in writing just a handful of texts. I wonder if the bloke even still has the texts.

dukeboxx

I think you are a very kind person

dertin03

I find it difficult to commit to friends and family with loans, it has a whole emotional thing behind it.

maz1964

hiya all

i keep popping into this thread just so i can feel that i was a kind person and still am though im not as stupid no more

unfortunately, i now realise friends or so called friends are like your best friend when they need help financially, after they got what they wanted at the time its fine for a while then they distance themselves from you, all their promises were just a bitter pill to now keep taking,,,

i have ended up with a ccj on the cc i took out to help my friend, she didnt pay the monthly payments and i couldnt afford it so ive ended up with the ccj,,,


though i went to court ive ended up paying a nominal amount each month as the judge said make sure you pay and the creditor cannot do anything else as i was so worried about a chqrging order on my house,,,,

so people please please hinder and think and i just wish someone had told me before my hard lesson in life, is to sure help others but not in any financial deal unless have a guarrantee against their assests and signed up at a solicitors office

nothing else is important this was a truested friend a sister i thought i had but nowhen it actually comes right down to paying it off im the one making all the effort to protect myself as much as i can

sad sad but reality,,,, if my story helps someone then im still a kind person,,,


take care maz

feel_betrayed_to_the_max

I read something about, only lending to family, in my opinion never because you stand loosing family I know I lost my by doing "good deed", I lent money to my sister, my only sister £47000, it was for the deposit of her house, it meant to be only for 10 days till money from her Off shore account clears, now is 3 years later. I didn't want to believe that my only sister would do such a thing to me. She gave me this sob story and me as a good sister get my husband to transfer money to her husbands account because that day they were closing a deal on the house and they had to give deposit first over to the solicitor. 2 weeks after initial transfer she sends me a cheque for £47000, of course that cheque bounced, bank sends me that cheque (i've got it). Than stream of her lies started and she succeeded to pull wool over my eyes for 2 years, than finally latest lie was that she invested in her project. Her husband doesn't even know that, that money came from me and my husband.
I need to confront her, but its hard on so many levels. Emotional is the biggest, money was my husbands inheritance so you can imagine how I feel. I haven't seen her or my little niece for over a year.
Does anyone have a advice for my situation. I want to resolve in nicest possible way, but am ready to go as it needs to go I mean legally. Please advice me, if you know where I stand legally. I'll first start by talk to see if we can get to some agreement. But I don't know, if that don't work where I stand.
I read some answers and think that they can be helpful but if anyone know more I would be very grateful.

dandelionclock30

A friend isnt a friend if they are asking to borrow money from you. Just answer that you are unable to help out financially but can direct them to the Credit Union etc that lends to people who usually cant get credit. If the person is in financial trouble then give info about the Local CAB. If you lend a friend a large amount of money then the chances are you will not get it back ever.
If its a family member then I would advise the same, unless I trusted them and even then would only lend a small amount like £10.00 or £20.00, then if they didnt pay it back then it wouldnt really matter.

To the person above- Your sister has seen you coming I'm afraid and has taken advantage of you. When you lent her this money you should have done it through a solicitor and got it secured against a property or something.
You can ask her for it back and appeal to her better nature but as far as getting legal help then I think there is very little you can do. Its her word against yours basically.

maradona10_2

dandelionclock30 wrote: »

A friend isnt a friend if they are asking to borrow money from you. Just answer that you are unable to help out financially but can direct them to the Credit Union etc that lends to people who usually cant get credit. If the person is in financial trouble then give info about the Local CAB. If you lend a friend a large amount of money then the chances are you will not get it back ever.
If its a family member then I would advise the same, unless I trusted them and even then would only lend a small amount like £10.00 or £20.00, then if they didnt pay it back then it wouldnt really matter

Hi Dandelion, I came on to look for some pointers but I clocked your comments and had to reply. I don't know what your circle of friends are like and how much they have asked to borrow from you in the past but to say a friend isn't a friend if they ask to borrow money from you is nothing short of nonsense and a harsh generalisation.

My good friend and I are always helping each other out when times are tough and we need to get by with a little cash boost. That's what makes us friends, that we trust each other enough to know we're not taking the p*ss.

I've seen people in the past taking advantage of others and never to be seen again so I can see that side of your point but its ridiculous to say that friends are not friends when money lending is involved.