VIC Debt to Friend - Personal Loan

[shalini]

Hi, my husband borrowed money from his friend (personal loan) and it was $5000. Out of 5000 debt, he has paid 800 back. Now the friend is asking for money. And saying he will complain and say its a fraud.

Well my husband didn't deny that he will pay all money back but just needs some time. Also, we moved to a new place and he is writing to us that our address is unknown that means we are hiding from him.

Can you please help me with how to deal with this situation?

 

[Ivy]

Hi Shalini,

I assume that the terms of the personal loan and the repayment timeline/ deadline were not written down?
If this is the case, I suggest that your husband make contact with his friend and arrange to make a written agreement. In this agreement the two of them can agree to a repayment schedule for the loan, and agree on any interest or penalties as well as state how much money has already been paid back.

Your husband's friend can pursue him for the full amount of the loan in the Small Claims Division of the Local Court. I suggest that it would be much less stressful for all of you if an agreement is made instead and your husband makes good on the agreement.

 

[shalini]

If he goes to court wht will happen. Wht court can ask us to do..

 

[Ivy]

Hi again,

If it went to court, the court would make a determination of:
-Whether there is a loan agreement (given that you both acknowledge it, the court would probably find that there is a loan agreement)
-What the terms of that agreement are
-How much is owing

The court would then make an order for your husband to pay back the money. However the stress and time and loss of income involved in going to court could potentially be avoided if your husband shows good faith and makes an agreement with the lender.