Lending Money (Your Advice) - Europe On $5 A Day - Roads To Riches - Cheap Ice-Cream Today

Posted by pfadvice
May 2, 2007

Lending money to family and friends often times ends up being less than a pleasant experience. I received an email from a reader that wants to know her options for money she lent to a friend that the friend is not paying back:

I made a big mistake and lent a large amount of money to one of my former friends. Amount was for $5,000 and we had a verbal agreement that she would pay it back to me slowly but surely every month. After paying back only $200 she has stopped making payments and refuses to even talk to me anymore. I know that I should have put everything down in writing, but she was my best friend at the time and I really didn’t think that I had anything to worry about. Now I am short $4800 without any prospect of getting it back.

I really don’t want to go to court to try and get this money. Is there any other option that I have to trying get it to?

Do you have any recommendations to her on the best way to resolve this unfortunate situation?

Remembering ‘Europe on 5 Dollars a Day’: It’s been 50 years since the classic budget travel book became an instant best seller. A look back to how it came about.

Roads To Riches: Should we be nervous at the privatization of public infrastructure and how will this effect the cost to the average person in the long run? Here are some reasons we may need to worry…

Baskin Robbins $0.31 Scoop Night: Tonight (May 2, 2007) from 5 pm to 10 pm Baskin Robbins across the country are offering ice-cream scoops for $0.31 in honor of the National Fallen Firefighters Foundation.

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Information: May 2nd, 2007; 7 Responses

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Reader Comments

Comment Number:: 1
Written by:: iforce
Posted on:: May 2, 2007 at 5:03 am

You have two choices:

1) Go to court - maybe small claims where a lawyer is not needed

2) write the money off

Comment Number:: 2
Written by:: mitchell
Posted on:: May 2, 2007 at 7:42 am

my research has revealed thus:

verbal contracts are almost equally as binding as written ones. there are some exceptions, but this case does not appear to be one.

you can take this to small claims court if you prepare well and will possibly win.

in order to do so, you need to make sure you obtain these things:
1) proof that your former friend DID receive the money
2) proof that they DID start to pay you back
3) any witnesses possible that might have overheard anything relevant (either the agreement itself or you discussing the agreement in some form)

write your former friend a letter stating that they still owe you money, stating that you have proof of the loan and proof that they acknowledged it by starting to pay the loan back, and tell them exactly what they need to start doing in order to continue to pay the debt back to you. send the letter certified with a return receipt.

if they get the letter and refuse, or refuse to accept the letter, take them to small claims court. if they start to pay you back again, bonus. even more proof for small claims court in the future if they stop paying again.

disclaimer: i’m not a lawyer, this is just what i’ve collected via internets.

Comment Number:: 3
Written by:: Alex
Posted on:: May 2, 2007 at 9:42 am

I am a lawyer, though this is not my specialty. A couple of broad notes:
1) Document everything. The more emails, letters, bank statements you can provide, the better. Try to get your friend to send you something you can use in court, for instance sending them an email with the hopes that they respond by email with some sort of acknowlegement of the debt.

2) The clock is ticking. The law only gives you a limited amount of time from the date of the injury to bring suit.

3) Reduce expenses. Small claims court and representing yourself is probably the way to go (if you decide to go to court). Remember, even a legal judgment will not guarantee that you get paid, as courts can be bad at recovering money from insolvent defendants.

Comment Number:: 4
Written by:: Joey (Subscribed)
Posted on:: May 3, 2007 at 2:46 am

Consider the money gone. Even after going to the extreme of suing, which I did, there is still that little issue of collecting. You cant squeeze blood from a turnip. It just turned to a nightmare. Now, I only loan money that I assume I will never see again. And turns out I like my money so I dont loan to anyone. Consider it lesson learned and move on.

Comment Number:: 5
Written by:: livingplanet
Posted on:: May 3, 2007 at 2:21 pm

i lent money to four good friends. they didn’t pay it off. the deep friendship ended. you learn. also, i realized early on the value of credibility and maintaining it. if you need the $, then you’ll have to sue or sell the loan somehow. if you don’t need it, avoid the stress. karma will take care of it.

btw, baskins was closed by 8:45 in tucson…..

Comment Number:: 6
Written by:: mr, John Daniel (Subscribed)
Posted on:: July 3, 2007 at 2:37 am

pls i want to know how to write letter of agreement,because i want to lent my friend some money.

Thanks mrs cabia

Comment Number:: 7
Written by:: mr, John Daniel (Subscribed)
Posted on:: July 3, 2007 at 2:41 am

sorry for the mistake.cabia is my wife name,
Thanks mr John Daniel