Verbal Agreement for Personal Loan

[Rikki-Lee]

Hi there. A friend got a loan for me to get a car (unsecured personal loan). The loan was for 6000 but I only used 4500. This was in may/June last year. I gave him 1000 at tax time. In August He was off work for a Month and wanted my computer. We then made an agreement that he would buy me a new phone and he would get my computer. When I chased him up on it in October, I also was going to give him another 500. He hung up the phone on me. I tried him several times that week. I tried again the following week. November 2nd I contacted one of his friends that said she would get him to call me. I never got that call. I tried several times throughout November and December and he never called me back.

Nothing was written down and everything was a verbal agreement. There was also no one around that heard the agreement.

My question is, can he take me to court for the rest of the money and if so how long does he have? I would happily pay him the money I owe but it has been so long now and I have a baby on the way that I want to make sure I know what's hanging over my head. I've been told 6 months from the last payment made, I've been told a year and 5 years. Clarification would be appreciated.

Thanks in advance

 

[Tim W]

1. Do you both agree on the amount owed?
   
   
2. If you have it, put the money aside now, so that you can always pay him instantly.
   If you don't have it, then start putting a bit aside every pay cycle, so that you can become ready to pay him instantly.
   
   
3. Without wanting to sound harsh - you owe that remaining money
   regardless of being pregnant, unemployed, sick, or whatever.
   So plan accordingly.
   
   
4. Why would he take you to court if you are willing to pay him?
   
   
5. The small claims court process is different in different states,
   but generally starts with a Letter Of Demand or similar.
   If you get one, then just pay him at that point.
   
   
6. Why not just send him a cheque in the post?
   
   
7. I get the feeling that you would benefit from
   some advice about personal and household budgeting
   more generally.

 

[Rikki-Lee]

I do have money sitting aside for him, not the whole amount but I have been putting it aside. I have tried contacting him on various occasions but he doesn't have the same number now, doesn't live where he did when I loaned the money from him. What I was trying to find out is if he can take me to court, how long he has and if I would get any notice before hand so I can organize to pay the money.

I know I owe him the money and I always pay my debts (if you saw how I budget then you would easily see that I am ahead of everything and save). If he came to me tomorrow and asked for the money I would happily hand my savings over and enter into a payment plan to pay the rest of the money owing. I was wanting to know where I legally stand so that I can plan occordingly.

If he came to me in 20 years time, would I still legally (not morally) owe that money? Or is it void after x amount of years?

 

[Tim W]

Which state are you in?

 

[Rikki-Lee]

Queensland

 

[Tim W]

I am a lawyer in New South Wales, not Queensland,
so factor that into how much notice you choose to take of what I say.

I note that you have not answered my question 1.
The answer is either "yes" or "no".
(don't tell me the amount still owing - I don't need to know that)

Can he take you to court?
Probably not court, because the amount of money is small.
However, he might be able to take you to to the Queensland Civil and Administrative Tribunal ("QCAT").
http://www.qcat.qld.gov.au/matter-types/debt-disputes/application-process-debt-disputes

So far as I understand it (not being a Queensland lawyer) ,
it is your friend who has to start the QCAT process,
by sending you a Letter of Demand. Refer to my item 5 above.

There is also a Dispute Resolution Service available which may be helpful.
http://www.justice.qld.gov.au/justice-services/dispute-resolution

As to timeframes, all that stuff about six years and seven years etc
is about how long HE has to start legal action (such as a QCAT claim) to recover the money.

That stuff is not about whether or not you still have to pay.
Rather, it's about how long he has to commence an action to recover the debt.

What you are asking is along the lines of "Does a debt die of old age"?
Unless there is some local law in Queensland of which I am unaware,
the answer is "mostly, no".
What does die of old age (so to speak) is the right of a creditor
to take legal action the recover the debt.

But, as long you are ready and able to pay immediately upon request
(if not, see item 2 above), and you make reasonable efforts
to contact him with offers to pay, then you are pretty much OK.

In the event that somebody claims that you have made no effort,
you may find that keeping a diary, and/or keeping emails and phone records
is useful to show that you have been trying to contact him.