Unpaid personal loan

[trs4594]

Hi,

I live in Ohio.

I have a well documented loan agreement under signature with a family member, due date has come and gone, and they have not kept up their end. In fact, they have not paid anything in spite of several written notices.

Can I sue for the amount (include attorney's fees and court costs), get a judgement, and pursue repayment through garnishment of wages (and if I could how would I do the garnishment?) Or write it off as a bad debt whereby they are held accountable as earned income and owe taxes. And last, does anyone know the allowances of writing off a bad debt on your taxes?

Appreciate any input, thx.

 

[hbreen]

One, if it qualifys for small claims, an attorney is not necessary. Yes, dependent on the amount, small claims may be an option. Check your state statutes on wage garnishment and what can be recouped from the debtor.

Hope this helps!

HBreen

 

[trs4594]

The amount was about $3800 and if paid as agreed was interest free. If not it was tiered with a penalty over 2 dates-a late date and a drop dead date. The individual has ignored for the most part so over the time frames I sent notices and a final notice advising there may be legal action. At this point I would try to compensate myself for any legal fees-small claim or civil court.

I caught a segment of the Susie Orman show that talked about taking a tax credit for a bad debt (in this case it was an unpaid loan also) and subsequently the dead beat would be accountable for the amount as earned income-thereby held tax liable.

So there it is, and I would appreciate any input from wise eyes and a nudge in the correct direction. By the way-the agreement was well documented and the individual signed and dated it.

Thx again.

 

[JETX]

Can I sue for the amount

Yes.

(include attorney's fees

Unless stipulated in the contract, no.

and court costs)

Yes.

get a judgement

Depends on the claim... and your case.

and pursue repayment through garnishment of wages

Yes. Ohio follows federal exemptions of '75% of disposable earnings per week,
or an amount = to 30 x federal minimum hourly wage, whichever is greater.'
However, you can only garnish ONCE per month, which means if they get paid weekly, you can only ganish one paycheck per month.

(and if I could how would I do the garnishment?)

Request from court after judgment.

Or write it off as a bad debt whereby they are held accountable as earned income and owe taxes.

Nope. What you are trying to apply is called a 1099-C.... and you don't qualify as a form filer.

And last, does anyone know the allowances of writing off a bad debt on your taxes?

There are some major hurdles that would have to be jumped before you can claim this as a write-off. One of them is that this be a TRUE loan... with specific repayment plan, interest, etc.
For more, go to:
http://www.inc.com/magazine/19950701/2351.html
http://www.1040form.com/02_tax_tips/deduct_loans.htm
http://findarticles.com/p/articles/mi_m1154/is_n3_v86/ai_20401411

Appreciate any input, thx.[/QUOTE]

 

[trs4594]

Thx JETX for your time, wisdom, and information. I will contact an attorney and get this in motion to see what can be salvaged.