Friend refusing to repay loan

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Yoga Woga

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A relative loaned 5K to a friend in Jan 2021.
In 2021, 1k was repaid.
There remains 4K owing and now the 'friend' is claiming the loan was only 2k to begin with.
No agreement was drawn up.
There is leverage perhaps in that the person getting the loan has been working and signing on and their community and connections from their country would not welcome this behaviour.
They would not be aware that they may be liable for tax on an interest free loan (does that apply between friends? Or only family loans?)
The value of the 5k in early 2021 versus now is 5700 odd.
If they refuse and do not repay is this sum potentially 'unjust enrichment'?
My relative is seeking legal advise as the friend is now just taking the mick.
I'm surprised my relative loaned any money at all, then again I let an idiot stay rent free in my house for 4 months! Live and learn!!
Steps and suggestions welcome.
 
Let the experience be a lesson - next time draw up a loan agreement

How was the loan made - by cash or bank transfer? If by bank transfer, then your friend will have record of the amount on their bank statement
 
jpd said:
Let the experience be a lesson - next time draw up a loan agreement

How was the loan made - by cash or bank transfer? If by bank transfer, then your friend will have record of the amount on their bank statement
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Withdrawal from bank and given in cash....
 
POC said:
Are there any mutual friends who were aware of the loan who could say something helpful?
I wouldn't be optimistic though.
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That's where the point re the community came in, a friend of theirs mentioned it wouldn't go down well.
 
Yoga Woga said:
They would not be aware that they may be liable for tax on an interest free loan (does that apply between friends? Or only family loans?)
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There is absolutely no tax liability in the event of default on a loan of this nature.

Yoga Woga said:
My relative is seeking legal advise as the friend is now just taking the mick.
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Waste of time and money.
 
I’m not surprised by this scenario. Your relation who loaned the money probably doesn’t have the street-cred of the likes of me (who doesn’t trust anybody, anywhere or any time) and some other posters. Chalk it down to experience and a down payment to a lesson of Street-Cred savvy. Likely, it’s the cheapest lesson he or she (probably a he) will experience. The Irish in the Irish dictates that you never ask for your money back that you have loaned or you’ll be castigated. We have credit unions and banks for loan repayments. I hope I haven’t offended.
 
T McGibney said:
Waste of time and money.
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Have to agree with Mr McGibney here an absolute waste of time and money, they're only going to throwing away good money after bad
Your relative in my opinion has lost the money and the friend if they even were a true friend in the first place
Although painful to hear if the person hasn't paid a penny in the last two years I doubt very much that is going to change in the future

Yoga Woga said:
There is leverage perhaps in that the person getting the loan has been working and signing on and their community and connections from their country would not welcome this behaviour.
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One thing I would do though is if the person is signing when they shouldn't be, I'd make a quick phone call to the powers that be in the hope that that might soften their cough so to speak!!
 
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Yoga Woga said:
That's where the point re the community came in, a friend of theirs mentioned it wouldn't go down well.
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Be careful that this does not backfire. If he accuses someone of welshing on a loan and can't prove it, there could be defamation involved.

On the other hand if he has some evidence that the guy owes €2,000 or €4,000, then it's unlikely to be defamation.

Is there a leader in this community?

Brendan
 
Hello,

With no evidence of the loan ever having existed, and no evidence of having even given the person the money, I think its an expensive lesson learnt...

Engaging a solicitor, is just throwing good money after bad. They'll run up some fees, but won't be able to win this one.

No doubt in my mind that I would sever all ties with the person involved, and if it were me, I'd probably tell everyone why. It's a judgement call, and not without it's risks (as Mr. Burgess points out, above), but in my view, what's right is right, here, so the last thing I'd be willing to do, is keep it quiet.
 
It’s a lot of money to just write off. If it were me I’d write a good strong letter to the person. I’d include some notes of disappointment at the persons willingness to destroy a relationship for the sake of this loan too.
 
While it's not going to change my view on the person's dishonesty, I am wondering what the Borrower's personal circumstances are - can they afford to repay the money?

If not, and I mean genuinely cannot afford to repay, then perhaps the loan should be "forgiven"?

However, my sense of this discussion is that the Borrower can afford to repay it.

If I'm right, perhaps some form of agreement to get out repaid over time, by regular repayments via standing order, can be negotiated? That might be worth suggesting in writing, but getting a solicitor involved just looks like a waste of money, in this instance, to me.
 
DeeKie said:
It’s a lot of money to just write off. If it were me I’d write a good strong letter to the person. I’d include some notes of disappointment at the persons willingness to destroy a relationship for the sake of this loan too.
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I think they've priced in destroying the friendship.

U would go for a Letter Before Action expecting 20% success.

Alternatively, try to meet ot phone the person and see if they will admit to the original debt. Show them the relevanf cash withdrawal on the bank statement. Amd record the conversation.
 
I'll summarise the comments and share with my relation. A repayment plan was suggested, and the equipment bought with the money could be sold by the borrower, still foolish to have loaned money imho (streetwise but soft on this occasion)...it was to fund a teen's progression in a competitive sport!
 
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