Unpaid Loans
and Guarantees

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“I lent him the money and he promised to pay me back – why hasn’t he?”

“She borrowed the money while we were in a relationship – now she has someone else she is refusing to pay me back.”

“You won’t believe it – my son claims the money I lent him to buy a car was a gift and is refusing to pay it back.”

The above are all true examples of claims that we have assisted with and have been successful in having the money repaid. All the above claims went to court and it was essential that the claim was presented in the correct way as all the Judge is interested in is the correct interpretation of the law.

Money loaned by ex partners refusing to make repayment.

Our largest caseload involves people who borrowed or lent money whilst in a relationship and then the ex-partner refuses to pay it back. It can be as little as £3,000 or as much as £10,000 or even more. Unfortunately, these claims can become nasty with threats being made when the money is requested to be repayed.

Many claimants make the mistake of simply thinking because they can show that the money was paid out from their bank that this is enough to prove it was made as a loan and many cases fail due to the fact that this is not sufficient. There must be supporting evidence to show it was meant as a loan and that it was agreed that repayment would be made. There is a limited period in law for repayment to be made after which the loan could be considered to be outside the six year limitation period.

We deal with assisting claimants to successfully reclaim money paid out from a partner to either an ex-partner of a previous relationship or even an existing partner.

After assessing the facts of the claim, we will immediately write a letter before action for the claimant under the required court protocol for it to be sent together with draft court papers demanding repayment of the money with full legal and evidential reasons. The defendant then has 21 days to repay the money or reach a satisfactory agreement failing which we will prepare court claim forms to be served by the court. If payment is not made within 28 days or a defence submitted then a County Court Judgment will be sought following which enforcement proceedings will be commenced to obtain the outstanding money or to seize property.

Money borrowed by children or family members

There are also problems with money paid out to children for cars, houses, furniture and many other things. Unless there is actual proof that this was meant as a loan, money paid from a parent or even by other family members can be considered as a gift.

It is up to the parent claiming that this was in actual fact a loan due to be repaid to prove this otherwise. Without such proof the court could well consider it as a gift.

There are different kinds of proof. The most common being that an agreement should be in writing and signed by all the parties but there must also be what is called a ‘consideration’. That could be as little as £1 which the persons taking the money pay to the lender in return for making them the loan.

Personal guarantees of loans

There is a relatively new kind of financial loan although made payable directly to the child or family member or even a friend or business associate, it is subject to a guarantee from the parent or parents or some other person. If payment is not fully made or instalments are missed the guarantor becomes liable for the payment and if talking about cars or houses this can be a considerable amount.

These institutions offering these loans supported by personal guarantee often make light that ‘you are only signing a guarantee’ and you are only liable if payments are not made. However, if the couple split up there could be substantial amounts owed.

We have had people who have been misled into signing such guarantees that we have assisted them in proving the guarantee was entered into without following the requirements.

These are specific legal requirements which if not properly carried out the guarantee may prove to be invalid. Such requirements concern where there is a relationship of trust between the debtor (borrower)and the guarantor there may be a requirement for the person signing the guarantee to receive INDEPENDENT legal advice as to the potential liabilities of that guarantee. Such a relationship can involve ex partners, friends, business associates and family members

Furthermore the bank or institution making the loan must show that it has carried out proper credit worthiness cheques on the debtor (borrower) and the guarantor failing which the guarantee may be invalid particularly if the debtor (borrower) defaults on the payment.

This is a very complicated area of law and if you have signed any guarantee for someone taking out  a loan whether they have failed to repay it or not contact us for a free assessment of your position.

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Claims Over £5,000

Claims Over £5,000

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