Personal Loan

Family member gave us a personal loan with the conditions of paying it back when we were in financial shape to do so.This was an oral agreement.We have had a falling out and they are now DEMANDING it be paid back IN FULL now.They have also figured in interest charges which they said they would NOT charge any when we made the loan.They say we will also pay all court and attorny fees to collect.They are threatning to take our home if we do not send the money NOW.Is this possible?HAVING A NERVOUS BREAKDOWN in Louisiana.

[JETX]

Lets handle the threat first.... unless you gave the lender (doesn't matter if it is friend, family or foe) specific permission to use your house as security for the note, they have no right to 'take your home'. So, lets get that one out of the way.

Second, this note is just like any other unsecured note, except MUCH weaker since it is not written. In order to enforce their demand for payment NOW, they will have to go to court and convince the judge that you are in breach of some repayment agreement (which doesn't appear to be correct based on your post).

Politely and courteously, tell them to pound sand and that you will repay them as you had originally agreed.

They have no written agreement. So, when and if it goes to court, it will be your word against their's. Witnesses on both sides will help either case, but it still comes down to what you say vs. what they say.

They weren't very smart for lending money based on an oral agreement, and you weren't smart for borrowing money from a relative. That leaves both of you in a sticky situation.

I suggest you tell them that you will pay them what you can, when you can. If that is not acceptable, tell them to sue you in court.

Don't worry, they cna't take your house. They can't take anything else without suing you in court first.

From this point on, make sure you document everything you say or write to these people. You may need it in court someday.

Thank you.What do you mean by documenting what we say or write?We only had an oral agreement so what kind of witness would I need if this should go to court?We do not live in the same state so what state would rule on this?

Re Documenting:

I mean that you should keep a log of all conversations you have with them. Keep track of what was said, when it was said, and who was a witness to the conversation. Also, if they send you anything in writing, keep copies.

Generally, any lawsuit should be brought where the loan was made. However, in some cases, it can be brought in the location where either party lives or does business.

Assuming this isn't a large amount of money (les than $3,000 in LA), they'll sue in small claims court, if they even bother to sue you.

If they did sue, you would only need to bring witnesses who were present when the loan was made, or who have first-hand knowledge of the loan contract. (maybe your spouse, etc)

Thank you.This loan was made via a phone conversation and a check was sent.

Well, even if they did sue, all they'd be able to do is get a judgement against you for the balance, plus interest.

If you want to resolve it, you might just want to begin sending whatever you can on a regular basis. That way, if you do go to court, you won't look like you were trying to completely avoid the debt.

From the sounds of it, they're just threatening to sue, without thinking through the process. Suing someone is a real pain...even in small claims court. There's a great deal of stress involved, filing fees, and no guarantee of winning. It's much better for everyone concerned to just resolve it without court.