Can a debt be collected without a contract?

[shannof72]

What is the name of your state (only U.S. law)? FL

Against my wishes, my sister let her boyfriends stepdad borrow $15,000 to "invest" with the promise of repayment over the course of three months with a profit of $3000 in that amount of time. ($18,000 total after three months). She was given one check for $3000 that bounced with no attempt at paying back the debt after that point. She has struggled to try to get the money back but there were no legal documents drawn up. The only proof is a copy of the initial check written and the bounced check. Is there anything that can be done???

[tranquility]

Obviously, there is not a loan "contract" here even if it were written up on golden sheets and signed by both parties and witnessed by a judge. The interest claimed is far above the amount allowed by FL law, so the contract would be unenforcable.

However, usually the principal amount is still owed.

The major problem is the term "invest". Investments can be lost.

Proving up if it was an investment or a loan will be a problem. In either case, the maximum amount will be $15K and in the investment scenario, it could be zero.

[KenGib]

I read the question a little differently than Tranquility. I thought you said that your sister lent the money for someone else to invest on his own behalf. Otherwise it wasn't a loan, but rather an investment itself. So did she lend it to him? or invest? If she lent, then I couldn't disagree with tranquility's comment about usury--I don't know Florida law. If it was an investment on her own behalf, then usury is out of the equation altogether. Sounds like a loan, since the parties specified an interest return, but this would be a question of interpretation.

To answer what seemed to be your question, though, a contract exists when two parties make an agreement. This can be shown by a written contract, but it can be shown in other ways, too. So I'd say your sister can pursue her action. In any event, I think she should talk to a lawyer.

[StephenH]

$1,000 a month interest on a $15,000 a month loan would equal an APR off 80%. Most payday lenders have APRs three to six times that!

[racer72]

my sister let her boyfriends stepdad borrow $15,000 to "invest"

Investments are like gambling, sometimes you win, sometimes you lose. Your sister lost.

[Zigner]

Originally Posted by StephenH

$1,000 a month interest on a $15,000 a month loan would equal an APR off 80%. Most payday lenders have APRs three to six times that!

Florida usury rate in this situation would be much lower than 80% - look it up.