lent money to family member. no written agreement. didnt repay the debt as agreed

[Mil888]

hi I lent a family member £8500 in 2007 as they were faced with credit card debt and was suicidal as cudnt afford to make the monthly repayments and was facing bankruptcy. the agreement I had with her was she wud repay £50 per month. it was a verbal agreement but after 4 monthly payments I received no more money. after a month of receiving no money she then joined the gym costing £50 per month and continued as ever to go out every day for a morning and sumtimes afternoon coffee. At the time I lent her the money I had very bad mental health issues and was under the care of the local mental health team. care plan , care officers CPN psychiatrist etc . The only proof I have that I lent her the money as I gave her it in cash is that she paid it into her bank account albeit via the deposit box inside the bank. Wat hope if any is there a way I can take her to court or threaten her with police ie taking advantage of a vunerable person to recover the money I lent her to get her out of a sticky situation. if she had kept up with the monthy repayments I wud of got my money back by now. Or have I just lost the money . Any help in this matter wil be greatfully received thx

[jaguarsuk]

hi I lent a family member £8500 in 2007 as they were faced with credit card debt and was suicidal as cudnt afford to make the monthly repayments and was facing bankruptcy. the agreement I had with her was she wud repay £50 per month. it was a verbal agreement but after 4 monthly payments I received no more money. after a month of receiving no money she then joined the gym costing £50 per month and continued as ever to go out every day for a morning and sumtimes afternoon coffee. At the time I lent her the money I had very bad mental health issues and was under the care of the local mental health team. care plan , care officers CPN psychiatrist etc . The only proof I have that I lent her the money as I gave her it in cash is that she paid it into her bank account albeit via the deposit box inside the bank. Wat hope if any is there a way I can take her to court or threaten her with police ie taking advantage of a vunerable person to recover the money I lent her to get her out of a sticky situation. if she had kept up with the monthy repayments I wud of got my money back by now. Or have I just lost the money . Any help in this matter wil be greatfully received thx

Unfortunately I think you have lost the money, the Limitations Act 1980 would mean that she could claim the debt as being Statute Barred (as it has been more than 6 years since the last payment) even if you were able to prove it as a loan.

However, it doesn't stop you writing to her with a letter saying you intend to commence court proceedings if she doesn't begin to repay the debt. She may well ignore the letter, but it may also make her begin repaying. If she makes even 1 payment, then you are able to make a claim if she ceases again within 6 years of any last payment.

I have successfully claimed against a family member last year for a loan which they ceased repaying on a verbal agreement, I did this by showing the money being repaid on a monthly basis at the same amount. The family member is now repaying via instalments as ordered in the judgement against her.

Basically your opportunity to recover this hinges on whether she received a letter demanding the money or you will consider taking her to court and her being sufficiently frightened by that to make payment(s).

[des8]

Although it is of little use to Mil888 the law commission published a paper in 2001 on the limitations of the current statute of limitations.
Under their proposals there would be a 3 year initial stop, plus a 10 year long stop. Adult disability would suspend the initial limitation period, but not the long stop.

[jaguarsuk]

Although it is of little use to Mil888 the law commission published a paper in 2001 on the limitations of the current statute of limitations.
Under their proposals there would be a 3 year initial stop, plus a 10 year long stop. Adult disability would suspend the initial limitation period, but not the long stop.

And to add that if Mil888 did file a claim at court it's whether A it would be defended and B even if it was, the defendant would plead stat barred or know what it is.

It really is a case of whether Mil888 wants to gamble with the cost of the fees, but a letter is the cost of a stamp plus the time taken to write it and that's where I'd start.

And further to add, make sure Mil888 in the letter you add all the details, so the date the loan was made and how much it was for, that they made X number of payments of £X. If they do make a payment off the back of this letter it will back up your verbal agreement as if there's no loan why would they pay in response to that letter?

[Diana M]

if Mil888 did file a claim at court it's whether A it would be defended and B even if it was, the defendant would plead stat barred or know what it is.

. . . in the letter you add all the details, so the date the loan was made and how much it was for, that they made X number of payments of £X. If they do make a payment off the back of this letter it will back up your verbal agreement as if there's no loan why would they pay in response to that letter?

It would depend on the response. The family member could:

(a) ignore the letter so as not to acknowledge the debt for SB purposes (if it isn't yet SB).

(b) seek free legal advice from the CAB who would make them aware that the "debt" is SB if they didn't know of the existence/meaning of SB (if it is already SB).

(c) instruct a solicitor on a No Win No Fee agreement to defend their positon if the debt is SB, and then they'd argue wasted costs in court even if the claim is allocated to the Small Claims Track.

(d) instruct a solicitor who specialises in Consumer Credit debts who may advise them that any loan made should have been underpinned by a CCA Regulated agreement in order for it to be enforceable in court (depending on the precise nature of the loan) and whether they would need to have been licensed by the OFT/FCA to make a loan at the time.

The "debt" appears to be over £8k and if interest were to be allowable it could be over £10k so possibly Fast Track where the other side's costs would definitely be an issue if the claim was unsuccessful.

My view is the OP should first establish whether the "debt" is SB and whether a claim could be defended on any other arguable legal issues before doing anything.

The burden of proof would be on the Claimant to evidence that those four £50 monthly repayments related to the "loan" and not something else.

They would need to prove that the £8,500 cash paid into the Defendant's bank account was from the Claimant (a cash withdrawal from the OP's account on the same day might assist based on the balance of probabilities but it's weak).

They would need to provide the exact terms of the loan (when did it have to be paid back etc in order to have breached those terms) knowing that this is likely to be disputed by the Defendant.

I think gambling on the fact that the family member is ignorant of SB issues, would be frightened into paying a debt, wouldn't defend so get a Default Judgment, and/or not going to seek formal legal advice is definitely a costs risk.


Sending a letter without being certain of the legal stance could open up a can of worms which has been closed for a decade.

Di

[jaguarsuk]

(a) ignore the letter so as not to acknowledge the debt for SB purposes (if it isn't yet SB).

Even if t were December 2007 having made 4 monthly payments it would have last payment in April if they started paying Jan 2008 and it's certainly Stat Barred.

I think given the behaviour of the relative that option (a) will be the result of the letter as if they see each other and she doesn't acknowledge the debt, it's unlikely they're gonna start all of a sudden.

One thing I have certainly learnt from my personal experience is to get it written down if I ever lend anyone money because even a close relative will potentially throw you under the bus.

[R0b]

It would depend on the response. The family member could:

(d) instruct a solicitor who specialises in Consumer Credit debts who may advise them that any loan made should have been underpinned by a CCA Regulated agreement in order for it to be enforceable in court (depending on the precise nature of the loan) and whether they would need to have been licensed by the OFT/FCA to make a loan at the time.

Di

Interesting you made this point as it is true, strictly speaking informal loans even between family members may constitute a consumer credit agreement. However, I believe that since the FCA took over, there is an exemption under the Regulated Activities Order that informal loans such as this (and in the same way as an employer-employee loan) which means that the requirements under the CCA are not applicable.

Even if there is no exemption for whatever reason, the loan would be most likely be deemed a 'non-commercial agreement' meaning that for the most part, the CCA formalities are not required to be complied with except in certain circumstances. For the same reason and based on the OP's original post, he/she is not likely to require FCA authorisation i.e. the loan is not made in the course of carrying on business.

But I agree, the SB argument seems to be a strong one, depending on when the last payment was made and if there has been any acknowledgment of the debt since.

[Diana M]

Interesting you made this point as it is true, strictly speaking informal loans even between family members may constitute a consumer credit agreement. However, I believe that since the FCA took over, there is an exemption under the Regulated Activities Order that informal loans. . . .

This alleged loan was from 2008 which predates the FCA.

Di

[R0b]

Still, the agreement is likely to fall within the definition of non-commercial agreement:

means a consumer credit agreement or a consumer hire agreement not made by the creditor or owner in the course of a business carried on by him

So for example none of Part V of the CCA is applicable to non-commercial agreements (see s.74) but depending on the circumstances, some of Part VII is applicable

[ieshaitv]

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