“The bank refused to grant me a loan because my income was low. I’ll try my luck with my uncle, he’s a rich man, he’ll certainly help me with the money. ”This idea might attack many people in financial need. Is a home loan a good idea?
The family is a relatively sensitive environment for such serious issues as lending money. In order to maintain good relations, its members can overlook the many financial risks that arise from lending. “I lent my brother 50,000 USD. Although he promised to return everything in a month, it’s been over six months, and I still haven’t seen the money, my brother avoids me. I’m desperate … ”Internet discussions with similar experiences are teeming.
You may say that this could not happen to you. You know your family member as your shoes, and if you ask for a loan, you can be sure of its reliability. But the opposite is true. You never know any person in the world 100% and you don’t fully understand how their brain works. You never know how to behave when it gets stressed due to insolvency and worries about its bare existence. Maybe he will try to act fairly and repay the loan. And maybe not, and he refuses to repay you.
Family loan only with a written contract
Although not many people may be something unnatural ( “You’re here with Franta not draw up a contract, you have known forever.”), A written contract is often the only evidence that the loan was made. In the event that you borrowed so. “On a good word, ”you cannot do anything in debt recovery because you have no way to prove it.
We understand the feelings you might be thinking. You are on a relaxed family barbecue, chatting with your brother-in-law about a loan, smelling meat all around, everyone is relaxed …. and you would drag a clerk like a written contract into such a relaxed atmosphere. They would look at you like a fool who doesn’t trust his own family!
Many people lend a family member without a contract out of fear of not suspecting them of mistrust. At the same time, it can be gracefully grinded out of this unpleasant moment thanks to several assertive sentences.
- I will lend you, but I prefer to write a written contract. It is for you and my comfort that we both know where we are and have everything clearly arranged. You know, order makes friends.
- Of course I will lend you, but I would like to issue a written document. I am a leaky head and I will not forget what I do not write. On the issue of money, I want everything clearly arranged.
If you are accused of making things unnecessarily complicated and not trusting him ( “ your brother! ” ), Don’t be blackmailed. Feel free to jump on his wave of communication with him and throw the blame in return: “But Pepo, would you really put me and my family at risk of lending someone without having written proof of it?”
In the event that the borrower is vehemently distorted from the possibility of a written document, please note and consider whether to provide the money at all. Maybe your relative is terrified of a written contract precisely because he is not sure of his ability to repay, or he is comfortable with the deadline for returning the loan.
What must the written contract contain?
A loan agreement need not be a complex ten-page document. In order to be legally valid, it is sufficient that it contains the following information:
- Who lends whom
- The amount the lender lends to the debtor
- Date by which the debtor is to return the money and how (by bank account, in person, by sending it to an address, etc.)
- Amount of remuneration for granting a loan (if you have agreed with the relative for example the amount of interest)
- What happens if the borrower fails to return money or is delayed (such as accruing interest for late payment)
- Date and signatures of both parties
What to do if the relative does not return the money?
If a family loan is provided with a contract, and yet the feared situation occurs when the relative does not return the money, you have much more trumps in your hand than without it.
What to do in this case? First, try to be friendly to family relationships and do not address the situation too radically. Try to get a refund by finding out why a person is not paying money and suggest a solution (such as postponing the maturity or spreading the amount over multiple installments). If it does not work, there is no other choice but to go to court. You have a loan agreement in hand – conclusive proof that debt exists, so your chances of success are very high. Although you will initially have to pay some court fees, they will be refunded after the dispute has been won (court fees are always charged to the losing party).