Lawyers, Love, and Money
April 11, 2010 12:35 PM Subscribe
A good friend of mine was recently engaged to be married... the fiance bailed shortly before the wedding day. However, some time previous to this she had taken out a home equity loan that was used to pay off his debts. He has so far continued to make the payments on the loan: what are her legal options for the future?
The situation is that while he makes a decent salary, she doesn't and would be unable to make the payments on the loan if he should stop making the payment, for whatever reason.
She is reluctant to get involved with lawyers both because she would have difficulty affording a lawyer and her desire to get past the whole experience. I'm concerned about this but am unwilling to push her because:
a) it's not clear to me that a lawyer would really be able to do anything for her given it's a loan in her name using her property as collateral
b) if he were to stop making payments in retaliation she would go into default rather quickly.
What are her real options?
The situation is that while he makes a decent salary, she doesn't and would be unable to make the payments on the loan if he should stop making the payment, for whatever reason.
She is reluctant to get involved with lawyers both because she would have difficulty affording a lawyer and her desire to get past the whole experience. I'm concerned about this but am unwilling to push her because:
a) it's not clear to me that a lawyer would really be able to do anything for her given it's a loan in her name using her property as collateral
b) if he were to stop making payments in retaliation she would go into default rather quickly.
What are her real options?
IANAL. Should it come to it, the fact that he is has made and continues to make payments can be presented as evidence of a loan/debt. The best course of action would be for her to believe that he will continue to make payments. However, should he miss a payment she should send him an e-mail that includes something like"so far you have paid back $xx of the $xx loan at payments of $xx. Your payment due x/x/xx has not been received. When can I expect the payment to be made." Depending on his reply, she'll have documentation of the debt and can take him to court as necessary.
posted by Pineapplicious at 12:53 PM on April 11, 2010
posted by Pineapplicious at 12:53 PM on April 11, 2010
Can't she scrape together a couple hundred for a consultation? Based on what you've told us it sounds like the stakes are too high for her *not* to talk to a lawyer.
Getting legal advice does not automatically mean acrimonious litigation. You asked what are her options: a lawyer who practices family law in your friend's jurisdiction is probably going to be in the best position to provide her a reliable answer.
The reason I suggest this is that family law is rife with situations where property or debt belonging to both parties is in one party's name only, and there are sometimes equitable ways to deal with this.
If this is in the US then the applicable laws vary from state to state and can be sometimes very nuanced. She really, really should talk to a lawyer.
posted by AV at 1:00 PM on April 11, 2010 [1 favorite]
Getting legal advice does not automatically mean acrimonious litigation. You asked what are her options: a lawyer who practices family law in your friend's jurisdiction is probably going to be in the best position to provide her a reliable answer.
The reason I suggest this is that family law is rife with situations where property or debt belonging to both parties is in one party's name only, and there are sometimes equitable ways to deal with this.
If this is in the US then the applicable laws vary from state to state and can be sometimes very nuanced. She really, really should talk to a lawyer.
posted by AV at 1:00 PM on April 11, 2010 [1 favorite]
Can she tell him to get another loan (somehow -- borrow from family if needed) and pay her off completely right now?
posted by spiderskull at 3:43 PM on April 11, 2010 [1 favorite]
posted by spiderskull at 3:43 PM on April 11, 2010 [1 favorite]
The suggestion that she "get her name off this debt" is simply naive. The lender wants the security of collateral. Sounds like she is the only one of the two who had any collateral.
She needs a written agreement, signed by him, that he owes her $x and that he will make monthly payments of $y. Since he is still paying, he may be willing to do this at this point. If he later fails to pay, she has the written agreement and can sue for breach of that agreement.
If he refuses, going to court is the only option. There was a contract - she agreed to the HE loan and he agreed to make the payments. The fact that it was an oral contract, not in writing, does not change that fact. But there is a wrinkle - an agreement to "be responsible for the debt of another person" must be in writing in most states. She could argue that that is not what is going on here. But that is why consultation with a lawyer is important at this point.
She should NOT simply wait it out and hope that he continues to pay. The more time that goes by, the more difficult it will be to prove that the agreement was made.
posted by yclipse at 4:26 PM on April 11, 2010
She needs a written agreement, signed by him, that he owes her $x and that he will make monthly payments of $y. Since he is still paying, he may be willing to do this at this point. If he later fails to pay, she has the written agreement and can sue for breach of that agreement.
If he refuses, going to court is the only option. There was a contract - she agreed to the HE loan and he agreed to make the payments. The fact that it was an oral contract, not in writing, does not change that fact. But there is a wrinkle - an agreement to "be responsible for the debt of another person" must be in writing in most states. She could argue that that is not what is going on here. But that is why consultation with a lawyer is important at this point.
She should NOT simply wait it out and hope that he continues to pay. The more time that goes by, the more difficult it will be to prove that the agreement was made.
posted by yclipse at 4:26 PM on April 11, 2010
a) it's not clear to me that a lawyer would really be able to do anything for her given it's a loan in her name using her property as collateral
An important point to clarify here is that there are in reality two loans here. The bank lent your friend money, on her collateral, and she is legally obligated to repay it. But then she lent the money to the ex-fiance and that is the murky and problematic part of all of this.
Ideally, the ex -- being a stand-up guy who has been making the payments despite walking out on her -- would recognize the wisdom of getting out of this arrangement sooner rather than later and agree to some accelerated terms of repayment.
Ultimately, though, she may need to look at protecting herself and that could include selling her home to pay off the loan. She might take a hit (e.g. short sale) and have to rent (mortgages are hard to come by right now), but it would beat the hit of foreclosure. That would probably be the fastest way for her to "get past" the dangerous part of this, where she owes her house if he changes his mind about paying.
posted by dhartung at 9:49 PM on April 11, 2010
An important point to clarify here is that there are in reality two loans here. The bank lent your friend money, on her collateral, and she is legally obligated to repay it. But then she lent the money to the ex-fiance and that is the murky and problematic part of all of this.
Ideally, the ex -- being a stand-up guy who has been making the payments despite walking out on her -- would recognize the wisdom of getting out of this arrangement sooner rather than later and agree to some accelerated terms of repayment.
Ultimately, though, she may need to look at protecting herself and that could include selling her home to pay off the loan. She might take a hit (e.g. short sale) and have to rent (mortgages are hard to come by right now), but it would beat the hit of foreclosure. That would probably be the fastest way for her to "get past" the dangerous part of this, where she owes her house if he changes his mind about paying.
posted by dhartung at 9:49 PM on April 11, 2010
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posted by pickypicky at 12:50 PM on April 11, 2010 [1 favorite]