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Ask The Legal Expert - Considering Lending Money to a Family Member?

View profile for Emily Summer
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I lent my brother £20,000 ten years ago so he could pay off some debts. At the time we came to a verbal agreement that he would start to repay me when he was in a position to do so and that I would be repaid in full within ten years. Ten years have now passed and he has only repaid £8,000. He is now ignoring my text messages and telephone calls in relation to the remaining £12,000. How can I get my money back?

Recovering money which has been lent to family or friends can be fraught with difficulty. Matters can escalate quickly and can lead to a breakdown in valued relationships, especially if the agreement has not been put in writing.

It appears that you have already tried to resolve the matter amicably with your brother but have been unsuccessful. Therefore, the next step would be to send your brother a Letter Before Action, in order to put him on notice that if he does not repay the £12,000, or put forward acceptable proposals for repayment, within 14 days you will be issuing court proceedings against him. A legal professional will guide you on the form and the content of the Letter Before Action.

The Letter Before Action may have the desired effect and prompt your brother to put forward proposals for repayment. If so, we can prepare a short and straightforward agreement setting out the repayment terms, which can then be signed by you and your brother, to confirm matters. If your brother owns a property then, with his cooperation, and with that of any joint owners and mortgage companies, you also have the option to secure the outstanding balance by way of a voluntary charge of the property. This will give you added peace of mind that the debt is secured.

If your brother does not cooperate within the 14 days then you can decide whether to issue County Court proceedings. Again, it is wise to discuss this course of action with a legal professional, so you can assess your prospects of success and the costs involved before issuing proceedings.

We see many cases where money is lent between family members without a written agreement either because they don’t want the hassle or the cost of getting a formal agreement drawn up, or because they feel awkward adopting such a formal approach with a loved one. However, disputes like this one are common and they can do lasting damage to family bonds. It is always best to have a formal loan agreement drawn up professionally before lending money to anyone, as the terms will be carefully defined and signed by all parties to confirm their agreement.

Emily Summer is an Associate Solicitor in Recoveries and Professional Liability at JCP Solicitors. The team is on hand for tailored legal support and advice. Please call Emily on 01792 529610 or email: emily.summer@jcpsolicitors.co.uk.

For further advice, please contact our specialist Debt Recovery Solicitors in:

  • Swansea: 01792 773773
  • Cardiff: 02920 225472
  • Carmarthen: 01267 234022
  • Caerphilly: 02920 860628
  • Cowbridge: 01446 771742
  • Haverfordwest: 01437 764723
  • Fishguard: 01348 873671
  • Pontypridd: 01443 408455

The question posed is based upon a hypothetical situation.

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