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Hi, is there any legal recourse I can take to get someone to repay in
full a loan I gave him against my credit line, the initial
understanding being that he would repay it on a monthly basis, an
amount equivalent to the minimum monthly payment required by the
credit card company? I am looking into legal actions as he's supposed
to do his utmost to pay it off asap but he's not demonstrating any
effort of that and the debt is also affecting my credit rating
adversely. Any advice please?
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On 5 Sep 2004, splitman2000@hotmail.com (splitman2000) wrote:
Hi, is there any legal recourse I can take to get someone to repay in
full a loan I gave him against my credit line, the initial
understanding being that he would repay it on a monthly basis, an
amount equivalent to the minimum monthly payment required by the
credit card company? I am looking into legal actions as he's supposed
to do his utmost to pay it off asap but he's not demonstrating any
effort of that and the debt is also affecting my credit rating
adversely. Any advice please?
You don't actually say that the borrower agreed (unconditionally) ever
to repay or in this connection whether you and he ever agreed to what
would be the trigger condition to repayment of the full balance.
To the contrary, you seem to be suggesting that you agreed that "he's
supposed to do his utmost to pay" and, even then, only "asap" even
then (whenever that "then" may be) as, meanwhile, you don't say who as
between the two of you was to be the arbiter whether "he's . . .
demonstrating [some amount of] effort" to repay although you do seem
to be suggesting that you agreed that his "demonstrating any [sic]
effort" to repay will suffice.
When (if at all) -- in other words, under what conditions as the
result of what acts/ommissions in particular -- did the borrower agree
the loan would become due and payable?
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You don't actually say that the borrower agreed (unconditionally) ever
to repay or in this connection whether you and he ever agreed to what
would be the trigger condition to repayment of the full balance.
I agree with you. The situation is a bit tricky and that's why I'm not
sure if I'm legally in a good position. It was a based on goodwill and
nothing specific was drawn up. He undertook to pay it off totally
asap, or at the very least repay the required monthly minimum. The
thing is he got a windfall a while back
but quickly claimed that he used it all up in no time for other more
important matters.
And you're right, there's no deadline set. One thing I can use to back
me up is that there were a few conditions to the loan - not major ones
unfortunately, which I can argue he has breached. Will that be grounds
enough to consider the contract null and void? To elaborate, my card
details were given to him to use for amount not more than x dollars.
He went ahead to exceed that amount which I subsequently claimed back
from him. He also agreed to handle the monthly payment for me via
internet banking but I ended up doing it myself - I would tell him how
much the min for the month was and he'd give me the cash which I then
deposit into my bank account before using it to pay the cc bill. He
also offered to do a few favours for me in return for the loan but
withdrew it when we had a heated argument once.
These are simple conditions which he can easily satisfy if I raise the
issue with him. But can I seek to nullify the contract on the grounds
that he has proved himself to be unreliable and I have no confidence
that he'd ever fully repay the loan?
To the contrary, you seem to be suggesting that you agreed that "he's
supposed to do his utmost to pay" and, even then, only "asap" even
then (whenever that "then" may be) as, meanwhile, you don't say who as
between the two of you was to be the arbiter whether "he's . . .
demonstrating [some amount of] effort" to repay although you do seem
to be suggesting that you agreed that his "demonstrating any [sic]
effort" to repay will suffice.
No arbiter, I'm afraid. It's a matter between the 2 of us.
When (if at all) -- in other words, under what conditions as the
result of what acts/ommissions in particular -- did the borrower agree
the loan would become due and payable?
Please see above.
Further advice is deeply appreciated.
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Hi, is there any legal recourse I can take to get someone to
repay in
full a loan I gave him against my credit line, the initial
understanding being that he would repay it on a monthly basis,
an
amount equivalent to the minimum monthly payment required by the
credit card company? I am looking into legal actions as he's
supposed
to do his utmost to pay it off asap but he's not demonstrating
any
effort of that and the debt is also affecting my credit rating
adversely. Any advice please?
You can sue for repayment of the note. Small claims court handles
this sort or thing every day. If the loan is not in writing, you
will testify about the terms agreed to. If you succeed in
convincing the court that the terms were: Payment of the the
minimum monthly payment required by the credit card company, then
that establishes the method of determining the amount of each
payment, and establishes the installment payment time ("monthly").
If you succeed in proving there was a loan but fail to prove the
terms of repayment, and the defendant testifies that there was no
definite installment amount or time, then this is a demand note.
A demand note is due on demand and not before. So send the
defendant a written demand for full payment. Certified mail.
Keep a copy of the letter, the return receipt and the mailing
receipt. Keep it short and polite. No need to go into the
history. When you get the return receipt back, or the notice that
the adressee refused the letter, sue in small claims.
McGyver
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Thanks for your input.
The problem is he does make the monthly payment but makes no effort to
try to pay it off in full. So technically, he's not in breach of the
contract in this aspect. However, as I explained in message 3, he
failed to honour the agreement on 3 counts:
1. He exceeded the amount I agreed to lend him on my credit card which
I had to claim back from him later
2. He undertook to handle the administration of the monthly payment on
my behalf but I am doing it myself now
3. He offer to do me a few favours in appreciation of the loan but has
withdrawn the offer.
Are these grounds enough to void the contract?
Thanks again...
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"McGyver" <Greyprof@msn.com> wrote in message news:<2q3bp7Fqd65iU1@uni-berlin.de>...
repay in
an
supposed
any
You can sue for repayment of the note. Small claims court handles
this sort or thing every day. If the loan is not in writing, you
will testify about the terms agreed to. If you succeed in
convincing the court that the terms were: Payment of the the
minimum monthly payment required by the credit card company, then
that establishes the method of determining the amount of each
payment, and establishes the installment payment time ("monthly").
If you succeed in proving there was a loan but fail to prove the
terms of repayment, and the defendant testifies that there was no
definite installment amount or time, then this is a demand note.
A demand note is due on demand and not before. So send the
defendant a written demand for full payment. Certified mail.
Keep a copy of the letter, the return receipt and the mailing
receipt. Keep it short and polite. No need to go into the
history. When you get the return receipt back, or the notice that
the adressee refused the letter, sue in small claims.
McGyver
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Thanks for your input.
The problem is he does make the monthly payment but makes no effort
to
try to pay it off in full. So technically, he's not in breach of the
contract in this aspect. However, as I explained in message 3, he
failed to honour the agreement on 3 counts:
1. He exceeded the amount I agreed to lend him on my credit card
which
I had to claim back from him later
2. He undertook to handle the administration of the monthly payment
on
my behalf but I am doing it myself now
3. He offer to do me a few favours in appreciation of the loan but
has
withdrawn the offer.
Are these grounds enough to void the contract?
Void isn't the right word. Breach of the contract doesn't make the
contract void. The right way to say it is: "Do these actions by the
debtor justify cancellation of the contract by the creditor?". The
answer depends on whether the breach is material and whether the
creditor actually does cancel the contract promptly upon discovery of
the breach.
I didn't understand that the debtor is making the minimum monthly
payments as agreed. As you said, that means you cannot sue for
repayment based on non-payment because there has been no breach in
that area. So, lets consider cancellation of the contract. If you
have the right to cancel, then you can sue for restitution of the
entire amount immediately.
Using your card to a level significantly above the amount authorized
is a material breach of the agreement. You can sue for that breach
and, since it is material, you can cancel the contract in reaction to
that material breach. He will testify that he used the card only to
the extent authorized. If you are unable to sustain your burden of
proof, he will win. And if you have treated the breach as minor, by
not cancelling the contract promptly, then it is a minor breach. You
can still sue for damages arising from a minor breach, but cannot
cancel the contract in reaction to a minor breach.
His handling of the administration is a minor matter, I think. I
don't see how you can prove any significant damage arising out of that
breach, but if you can, you can sue for the breach. But the breach is
minor in my opinion, and therefor does not justify your cancelling the
contract.
Offering favors and withdrawing the offer is not a breach.
Failure to do his best to pay the full balance ASAP is a material
breach, and if you can prove it, that would justify cancelling the
contract. But not if you treated the breach as minor by not
cancelling promptly. And I expect the debtor would testify that there
was not such promise. So you might have dificulty sustaining the
burden of proof.
There is no harm in suing for cancellation of the contract and
restitution based on material breaches. If you lose you haven't lost
much. The debtor still has to keep making the payments. Your option
is to not sue, and let him make the payments until the debt is paid
off. I would pay off all other debt that might be on that account,
and not use it again. That way, all interest charges are clearly his.
He must keep paying, including the 18% interest or whatever, until the
debt is paid. That might well influence him to get rid of the debt by
paying it off. And even if he simply continues making the payments,
that's not a terrible result.
McGyver
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"McGyver" <Greyprof@msn.com> wrote in message
news:<2q3bp7Fqd65iU1@uni-berlin.de>...
Hi, is there any legal recourse I can take to get someone to
repay in
full a loan I gave him against my credit line, the initial
understanding being that he would repay it on a monthly basis,
an
amount equivalent to the minimum monthly payment required by the
credit card company? I am looking into legal actions as he's
supposed
to do his utmost to pay it off asap but he's not demonstrating
any
effort of that and the debt is also affecting my credit rating
adversely. Any advice please?
You can sue for repayment of the note. Small claims court handles
this sort or thing every day. If the loan is not in writing, you
will testify about the terms agreed to. If you succeed in
convincing the court that the terms were: Payment of the the
minimum monthly payment required by the credit card company, then
that establishes the method of determining the amount of each
payment, and establishes the installment payment time ("monthly").
If you succeed in proving there was a loan but fail to prove the
terms of repayment, and the defendant testifies that there was no
definite installment amount or time, then this is a demand note.
A demand note is due on demand and not before. So send the
defendant a written demand for full payment. Certified mail.
Keep a copy of the letter, the return receipt and the mailing
receipt. Keep it short and polite. No need to go into the
history. When you get the return receipt back, or the notice that
the adressee refused the letter, sue in small claims.
McGyver
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On 5 Sep 2004, splitman2000@hotmail.com (splitman2000) added with
respect to his former friend's failure to repay a loan:
[ Nothing specific was drawn up. He undertook to
pay it off totally asap, or at the very least repay
the required credit card minimum but there's no
deadline set. I have not done anything to seek
redress for an initial violation by him of our
understanding, i.e., that I authorized him to use
my credit card to incur up to no more than $x
indebtedness on my behalf but he exceeded that
amount; although he later mooted my objection
in this respect by repaying the excess when in
response to my demand. But I contend that he
has been in breach at least to the extent that
he reneged on handling the monthly payments for
me via internet banking, causing me to do so myself,
though he has otherwise been making the agreed
monthly payments more or less on time. But can
I seek to nullify the contract on the grounds that
he has proved himself to be unreliable? ]
Your questions may be interesting and their analysis perhaps helpful
to a first-year law student, but they dance around the practical --
namely, the answer to the question what is the probably least
inefficient and also least costly way to try to obtain repayment?
As a footnote to the "McGyver" analysis, in technical-analytical
terms, e.g., you at least approach (but still have not clearly stated)
a claim to the effect that the borrower has not acted in good faith --
f'r'instance, that the borrower came into a dollar "windfall" yet
applied those funds to other expenses rather than repay you.
But even in this connection, though it is arguable that that
"windfall" created the "asap" condition, you also have not said that
he and you had actually agreed that he need do anything more than make
the agreement minimum monthly payments which you seem to have
suggested he has done more or less when/as agreed.
Thus (if one is to approach the transaction in strictly analytica
terms) it is not even clear whether there can be a well-founded claim
that he is in breach of what is commonly said to be a "covenant of
'good faith and fair dealing" said to be implied in pretty much every
agreement.
But the PRACTICAL question, the what-to-do? issue, remains, and, in
addition to (or, perhaps, as a predicate to) what "McGyver" suggests
may be:
Demand immediate fully repayment; (perhaps and deciding in advance
whether his doing this will be acceptable to you) be prepared to
negotiate (only in part) by (on an entirely "without prejudice basis)
insisting that your erstwhile friend and potential semi-deadbeat at
the least sign a simple document (whether you term it a "Note" or
"I.O.U." or don't label it at all is immaterial) saying (in substance
if not in these exact words), "I promise that to repay and that I will
have repaid the $__ I borrowed from you [with #% interest from
[stated-date]?] in [municipality] without any need for any further
demand from you on or before [date]" or, if you prefer, in
clearly-stated installments; and(or) if you decide not to ask for such
a document signed by him or (especially) if you do ask but if he
declines, decide whether to sue in your area's small claims court (if
the amount in issue is less than that court's jursdictional cap) and,
if you do, focus on stating the facts _clearly_, especially about his
not repaying when he received his "windfall" (again, cf., the "asap"
condition to which you say you both agreed) and about is not
implementing the monthly payment plan as agreed.
If you sue, even if you do not prevail, you will not be any worse off
than you are now except for the time and (probably just minimal)
filing fee. But (IF you are clear and also credible about what you
contend to be a too-long delay), it may be equally likely that, at the
least, a court-mediate stipualtion confirmed/implemented by an
enforceable judgdment will result.
If (as you seem to imply?) the outstanding balance is itself not more
than basically nominal, an alternative may be just to "grit your
teeth" and get what you reasonably can, when you can, writing off
whatever may become the unpaid portion as if "tuition" in the "school
of Life" (or, if you prefer, "school of hard knocks") rationalizing
that this "tuition" may be well worth whatever is the dollar amount
_IF_ you will have actually learned the lesson taught thereby -- i.e.,
(whether or not memorialized by a note) do NOT lend money to friends
or family, unless it is a sum one is prepared not to have repaid or,
at least, do not again lend money to anyone without a
clearly-stated/signed note which, if used, preferably contains
easy-to-implement service-of-process provisions (e.g., by ordinary
first-class mail) and also meaningful remedial provisions (e.g.,
besides interest, a clearly stated
debtor-in-default-pays-all-lender's-reasonably-incurred-attorneys-fees
requirement).
Only you can decide what is most practical in the circumstances,
albeit that these are circumstsances you have created by your choice
that "nothing specific was drawn up" and that you also opted to be
less than "specific" in your oral communications.
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Thanks for such a detailed analysis.
The problem is exactly that - that he hasn't breached the contract per
se in that he's been paying the monthly minimum although the initial
agreement was that he was to administer that on my behalf. And
althought he promised to pay the loan off asap, 'asap' is subject to
anybody's interpretation. To me, the time he got the windfall was the
time he should have repaid me, but to him, that's not 'asap', as he's
got oher projects which needed funds.
I don't think demanding immediate full repayment from him works as
he's adamant that he's doing what's agreed - monthly minimum payments
- and he doesn't have the funds to pay in full. The only way I can get
him to do it seems to be by legal means, and even then, I'm not sure I
have a case at all, going by the views offered on this board. :(
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Thanks for such a detailed analysis.
The problem is exactly that - that he hasn't breached the contract per
se in that he's been paying the monthly minimum although the initial
agreement was that he was to administer that on my behalf. And
althought he promised to pay the loan off asap, 'asap' is subject to
anybody's interpretation. To me, the time he got the windfall was the
time he should have repaid me, but to him, that's not 'asap', as he's
got oher projects which needed funds.
I don't think demanding immediate full repayment from him works as
he's adamant that he's doing what's agreed - monthly minimum payments
- and he doesn't have the funds to pay in full. The only way I can get
him to do it seems to be by legal means, and even then, I'm not sure I
have a case at all, going by the views offered on this board. :(
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Thanks for such a detailed analysis.
The problem is exactly that - that he hasn't breached the contract per
se in that he's been paying the monthly minimum although the initial
agreement was that he was to administer that on my behalf. And
althought he promised to pay the loan off asap, 'asap' is subject to
anybody's interpretation. To me, the time he got the windfall was the
time he should have repaid me, but to him, that's not 'asap', as he's
got oher projects which needed funds.
I don't think demanding immediate full repayment from him works as
he's adamant that he's doing what's agreed - monthly minimum payments
- and he doesn't have the funds to pay in full. The only way I can get
him to do it seems to be by legal means, and even then, I'm not sure I
have a case at all, going by the views offered on this board. :(
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Thanks for such an informative and educational reply. Very much
appreciated...
Using your card to a level significantly above the amount authorized
is a material breach of the agreement. You can sue for that breach
and, since it is material, you can cancel the contract in reaction to
that material breach. He will testify that he used the card only to
the extent authorized. If you are unable to sustain your burden of
proof, he will win. And if you have treated the breach as minor, by
not cancelling the contract promptly, then it is a minor breach. You
can still sue for damages arising from a minor breach, but cannot
cancel the contract in reaction to a minor breach.
The problem is I discovered the breach and made him pay back the
excess amount right away. That I suppose doesn't count as a breach
then?
His handling of the administration is a minor matter, I think. I
don't see how you can prove any significant damage arising out of that
breach, but if you can, you can sue for the breach. But the breach is
minor in my opinion, and therefor does not justify your cancelling the
contract.
Not much damage frankly except that I have to go through the hassle of
telling him how much the minimum amount is, get it from him, and
deposit the cash in the bank before using it to pay the bill online.
Offering favors and withdrawing the offer is not a breach.
Too bad.
Failure to do his best to pay the full balance ASAP is a material
breach, and if you can prove it, that would justify cancelling the
contract. But not if you treated the breach as minor by not
cancelling promptly. And I expect the debtor would testify that there
was not such promise. So you might have dificulty sustaining the
burden of proof.
I guess that's where my problem is. To me, winning a windfall was the
time for him to pay off the loan - my interpretation of "making every
effort to pay it off in full asap". To him, however, he had other
projects which needed the funds. It's difficult to prove my case,
isn't it?
There is no harm in suing for cancellation of the contract and
restitution based on material breaches. If you lose you haven't lost
much. The debtor still has to keep making the payments. Your option
is to not sue, and let him make the payments until the debt is paid
off. I would pay off all other debt that might be on that account,
and not use it again. That way, all interest charges are clearly his.
He must keep paying, including the 18% interest or whatever, until the
debt is paid. That might well influence him to get rid of the debt by
paying it off. And even if he simply continues making the payments,
that's not a terrible result.
My concern is that if he continues to just pay the minimum, it's gonna
take forever to pay it off totally, since the minimum is hardly enough
to cover the monthly interest incurred. And what if he goes bankrupt
or something happens to him? The difference between lending somebody
money I have and on my credit is that in the former case, I can write
it off as bad debt, but in the latter, I need to source for funds to
pay off the loan should something happen to the debtor.
It's definitely a lesson learned, if nothing else...
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Thanks for such an informative and educational reply. Very much
appreciated...
The problem is I discovered the breach and made him pay back the
excess amount right away. That I suppose doesn't count as a breach
then?
It was a breach and you treated it as minor by not cancelling the
contract.
His handling of the administration is a minor matter, I think. I
don't see how you can prove any significant damage arising out of
that
breach, but if you can, you can sue for the breach. But the
breach is
minor in my opinion, and therefor does not justify your cancelling
the
contract.
Not much damage frankly except that I have to go through the hassle
of
telling him how much the minimum amount is, get it from him, and
deposit the cash in the bank before using it to pay the bill online.
Too bad.
I guess that's where my problem is. To me, winning a windfall was
the
time for him to pay off the loan - my interpretation of "making
every
effort to pay it off in full asap". To him, however, he had other
projects which needed the funds. It's difficult to prove my case,
isn't it?
Yes. But the monthly payments will eventually irritate the debtor
because if he is only paying the interest he will never be done. When
he realizes that he will either quit paying or pay it off. If he
quits paying, then you sue. You should be keeping records of his
payments to you so that you can use those payments as proof that there
was a loan in the first place. If he is paying by check, that's good
enough. If he is paying you in cash, give him a receipt containing
the notation: "loan installment, Sept 04."
There is no harm in suing for cancellation of the contract and
restitution based on material breaches. If you lose you haven't
lost
much. The debtor still has to keep making the payments. Your
option
is to not sue, and let him make the payments until the debt is
paid
off. I would pay off all other debt that might be on that
account,
and not use it again. That way, all interest charges are clearly
his.
He must keep paying, including the 18% interest or whatever, until
the
debt is paid. That might well influence him to get rid of the
debt by
paying it off. And even if he simply continues making the
payments,
that's not a terrible result.
My concern is that if he continues to just pay the minimum, it's
gonna
take forever to pay it off totally, since the minimum is hardly
enough
to cover the monthly interest incurred. And what if he goes bankrupt
or something happens to him? The difference between lending somebody
money I have and on my credit is that in the former case, I can
write
it off as bad debt, but in the latter, I need to source for funds to
pay off the loan should something happen to the debtor.
If he files for bankruptcy protection, kiss the loan goodbye. Then
write it off.
McGyver
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It was a breach and you treated it as minor by not cancelling the
contract.
Does that mean that I cannot take action retrospectively?
Yes. But the monthly payments will eventually irritate the debtor
because if he is only paying the interest he will never be done. When
It doesn't seem to be. It seems he's biding his time for something.
That's what irritates me. I am the one bearing the risk because
technically it's my debt. I'm like his secretary or adminstrative
assistant, reporting to him every month how much he owes and then
administer the payment for him. It just sucks. I didn't bargain for
this when I agreed to lend him the money...
And in the meantime, my credit history suffers because of this debt. I
had never owed any credit card debts before...and what happens if I
need to draw on my credit line which is now not available? It's not
fair.
If he files for bankruptcy protection, kiss the loan goodbye. Then
write it off.
I won't have the cash to pay it off myself.
Being a samaritan sucks. Big time.
McGyver
Thanks for your advice.
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It was a breach and you treated it as minor by not cancelling
the
contract.
Does that mean that I cannot take action retrospectively?
Yes, in this case. You can't cancel a contract for a minor
breach. Normally you can sue for damages arising from a minor
breach, but in this case you already settled the matter by
accepting repayment.
Yes. But the monthly payments will eventually irritate the
debtor
because if he is only paying the interest he will never be
done. When
It doesn't seem to be. It seems he's biding his time for
something.
That's what irritates me. I am the one bearing the risk because
technically it's my debt. I'm like his secretary or
adminstrative
assistant, reporting to him every month how much he owes and
then
administer the payment for him. It just sucks. I didn't bargain
for
this when I agreed to lend him the money...
And in the meantime, my credit history suffers because of this
debt. I
had never owed any credit card debts before.
Your credt history is improved by this situation. If you never
had credit card debt, and now you do, and it's being paid
regularly every month, your credit better than before. So far.
...and what happens if I need to draw on my credit line which is
now not available?
Get a new credit card, with a different company, for you own use.
If he files for bankruptcy protection, kiss the loan goodbye.
Then
write it off.
I won't have the cash to pay it off myself.
Make payments.
Being a samaritan sucks. Big time.
Not if you do it right.
McGyver
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Thanks! You have been of great help...
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