Protecting myself while lending money

[Maxf]

I am in the position of having to lend a sizeable (5 figures) sum of money to someone. I have very little choice in the matter, which is outside of my control but I am unfortunately linked to. Basically a massive fk up.

So, is there any way I can protect myself while lending this cash. I am obviously not a licenced lender, so this will have to be an informal arrangement, but I would like some comfort that, if I have to go to court to get the money back, I stand a better than fair chance of success.

I was thinking:

1. Signed letter detailing the amounts and reason for loan.
2. Fixed repayment schedule - again signed.
3. Direct Debit payments to me called 'loan repayment' or something similar (so I have a bank statement trail.

Unfortunately I can't simply walk away from this issue, and fully appreciate I might get nothing/little back.

Any advice?

[-Pete-]

Is there something (or things) you can buy from this person, then sell back at a later date? Otherwise, I fear you already know the answer.

[Maxf]

-Pete- said:

Is there something (or things) you can buy from this person, then sell back at a later date? Otherwise, I fear you already know the answer.

Not really - and certainly not enough to cover the debt.

I know the answer, but there must be certain steps I can take to make it a little more secure and 'winable' in court? Even if it only appears more winable to the other party.

[ShadownINja]

That sounds like an annoying place to be in. I'd love to know the details to see why you can't say "no". I suppose one issue is that they could declare bankruptcy to avoid paying or put incredible pressure on you to not make them go bankrupt ("You wouldn't do this to your own father, would you?") so you just end up having to give them the money.

[Maxf]

ShadownINja said:

That sounds like an annoying place to be in. I'd love to know the details to see why you can't say "no".

The details are fit for a junky magazine story. I'm utterly taken aback by it all, but have to deal with it.

If I don't lend the money (or pay the debt) I will end up in court myself as a joint party.

If I lend it, the debt gets paid and I can chase the other person for the money I lent. If I 'just' pay the debt myself (which I didnt know existed until 48 hours ago) the joint party will be off scot free with only their questionable morals and poor financial judgement between them and me getting paid. At least my way I can either take goods (as the poster above suggests) and get some kind of agreement in place.

Granted its a stty situation vs a stty situation but I think the way I suggest has more immediate chance of me getting at least some money back.

Its a monumental fk up on a number of levels.

[voicey]

Unsecured loans are not regulated by the FSA - anyone can lend money (just look at doorstep lenders). There's no reason why you cannot get a lawyer to draft up an agreement.

[scotal]

Max, YHM.

[Stevenj214]

Maxf said:

Granted its a stty situation vs a stty situation but I think the way I suggest has more immediate chance of me getting at least some money back.

Or maybe you lend it, it doesn't go to pay what it's supposed to and you're down twice...?

[Maxf]

Stevenj214 said:

Maxf said:

Granted its a stty situation vs a stty situation but I think the way I suggest has more immediate chance of me getting at least some money back.

Or maybe you lend it, it doesn't go to pay what it's supposed to and you're down twice...?

Yes. A major concern, but I think I've got that covered as it will be a draft at the bank, paid into the right account with me present.

[P-Jay]

voicey said:

Unsecured loans are not regulated by the FSA - anyone can lend money (just look at doorstep lenders). There's no reason why you cannot get a lawyer to draft up an agreement.

You need a CCL to lend money at any sort of interest.

Doorstop lenders are ether the legal I.E. high-risk, high-interest but legitimate lenders who offer short-term loans to people over short terms for 'rainy day' type events and illegal loan sharks/heavies.

[P-Jay]

The circumstances of this seem pretty dark.

I can think of no way 1 person could get another into debt unknowingly legally.

AFAIK you can have pretty much anything drafted into a contract when you lend the money, enforcing it is quite another matter

If you think you'll increase your chances of getting it back by making them sign something it's probably worth it, but if you think you can go after them and their assets (if any) if they refuse to pay using some kinda of contract I don't suspect you'll have a cat in hells chance.

[Maxf]

P-Jay said:

voicey said:

Unsecured loans are not regulated by the FSA - anyone can lend money (just look at doorstep lenders). There's no reason why you cannot get a lawyer to draft up an agreement.

You need a CCL to lend money at any sort of interest.

I'd be happy to just retain my capital and forego any interest in order to get a watertight agreement in place. Not ideal, of course.

[E55 Max]

Do they have a property? If so then get an agreed charge put on it, so at least you have some come back in the future.

[Maxf]

P-Jay said:

The circumstances of this seem pretty dark.

I can think of no way 1 person could get another into debt unknowingly legally.

Yes they are dark, and several crappy things have happened for me to legitimately be in significant debt through the actions of another. Absolutely unknowingly. Of course I knew the potential was there and willingly entered the agreement, but knew nothing of the debt until it had snowballed to epic proportions.

It relates to a joint tenancy, where the rent was paid from one person's account to the landlord. Or wasn't as the case may be. Probably illegal and from my position I consider it theft - however, legally, the debt is mine.

I'm pretty grateful I'm broadly in the position to sort it or I'd be a very, very unhappy person at the moment.

Edited by Maxf on Thursday 19th August 13:56

[ShadownINja]

Maxf said:

Stevenj214 said:

Maxf said:

Granted its a stty situation vs a stty situation but I think the way I suggest has more immediate chance of me getting at least some money back.

Or maybe you lend it, it doesn't go to pay what it's supposed to and you're down twice...?

Yes. A major concern, but I think I've got that covered as it will be a draft at the bank, paid into the right account with me present.

That is a VERY good point. It's paid in, then you see the person swanning around in a nice new BMW. What then? Or did you mean the landlord's account?

Alternative (possibly): it goes to court, you pay your half of the monies due (which I suspect you've already paid via the partner?), other half is buggered. Tough?

Edited by ShadownINja on Thursday 19th August 14:43

[Maxf]

ShadownINja said:

That is a VERY good point. It's paid in, then you see the person swanning around in a nice new BMW. What then? Or did you mean the landlord's account?

Alternative (possibly): it goes to court, you pay your half of the monies due (which I suspect you've already paid via the partner?), other half is buggered. Tough?

I'd pay it in to the landlords account (or the other party would, with me present).

If it did go to court (which I clearly dont want it to) I would be liable jointly for the whole of the debt (of which I've already paid half into the ether) so would be in the same position. If I could pay half and walk away a free man I would - unfortunately I am the party with the highest chance of paying, so it wouldnt be possible.

What an utterly terrible situation. I'm not trying not to pay, I realise I am responsible, and accept that. I just want the most come back possible.

[P-Jay]

Maxf said:

P-Jay said:

voicey said:

Unsecured loans are not regulated by the FSA - anyone can lend money (just look at doorstep lenders). There's no reason why you cannot get a lawyer to draft up an agreement.

You need a CCL to lend money at any sort of interest.

I'd be happy to just retain my capital and forego any interest in order to get a watertight agreement in place. Not ideal, of course.

I don't doubt it, I was just challening the idea 'anyone' can lend money (and legally expect it back) and especially the legitimacy of some doorstep lenders.

I really feel for you, no way I'd give any money direct to anyone but the Landlord, if you're joinly reponsible it should be no issue to come from you.

Edited by P-Jay on Thursday 19th August 14:58

[Maxf]

P-Jay said:

I really feel for you, no way I'd give any money direct to anyone but the Landlord, if you're joinly reponsible it should be no issue to come from you.

Thanks. And yes - no way on earth anymore of my money is going to anybody but the LL.

[mrmr96]

Maxf said:

P-Jay said:

voicey said:

Unsecured loans are not regulated by the FSA - anyone can lend money (just look at doorstep lenders). There's no reason why you cannot get a lawyer to draft up an agreement.

You need a CCL to lend money at any sort of interest.

I'd be happy to just retain my capital and forego any interest in order to get a watertight agreement in place. Not ideal, of course.

As voicey says: my first thought was to get a lawyer to draft something. It will cost you a couple of hundred quid to have it written PROPERLY (not just you knocking something up in Word and getting it signed) and I think it will be money well spent in the long run because (given what I've gleaned about the other party) the chances of you having to rely upon the agreement in court at a future date would appear to be high.

Do it once. Do it right. This is one occasion where I think it really really is worth paying to get the job done properly.

[ShadownINja]

Maxf said:

I'd pay it in to the landlords account (or the other party would, with me present).

If it did go to court (which I clearly dont want it to) I would be liable jointly for the whole of the debt (of which I've already paid half into the ether) so would be in the same position. If I could pay half and walk away a free man I would - unfortunately I am the party with the highest chance of paying, so it wouldnt be possible.

What an utterly terrible situation. I'm not trying not to pay, I realise I am responsible, and accept that. I just want the most come back possible.

Morally, I can't see why you should be responsible; you've paid your side already. I hoe it works out well for you. Why can't the partner get a loan? They've clearly taken your money.