Why not to loan friends money.
March 5, 2010 8:22 PM Subscribe
Does my friend have any legal recourse to get back money loaned to another friend who has no intention of paying up? More details below.
About six years ago, my friend "Lady" loaned $3,000 to another friend, "Mofo". At the time they and a witness signed an agreement stating that Mofo was aware this was a loan and would pay it back. He has yet to give her a cent. A couple of weeks ago Lady asked him again about the money; he accused her of disrespecting their friendship and promptly blocked her phone number and defriended her on Facebook. Lady is a full time and penniless student, Mofo is a full time worker who can well afford to pay her back. Lady still has the signed aggreement, contact with the witness and all Mofo's contact details. Is there anything she can do? This is in Melbourne, Australia.
About six years ago, my friend "Lady" loaned $3,000 to another friend, "Mofo". At the time they and a witness signed an agreement stating that Mofo was aware this was a loan and would pay it back. He has yet to give her a cent. A couple of weeks ago Lady asked him again about the money; he accused her of disrespecting their friendship and promptly blocked her phone number and defriended her on Facebook. Lady is a full time and penniless student, Mofo is a full time worker who can well afford to pay her back. Lady still has the signed aggreement, contact with the witness and all Mofo's contact details. Is there anything she can do? This is in Melbourne, Australia.
Might want to ask a mod to put "Australia" before the cut, or you'll get a lot of well-meaning North Americans jumping in and giving you incorrect advice.
posted by desjardins at 8:45 PM on March 5, 2010 [2 favorites]
posted by desjardins at 8:45 PM on March 5, 2010 [2 favorites]
Getting the cash may be difficult, but the signed agreement will help on taxes. Lady can write off Mofo's loan as a bad debt expense assuming she has the proper income to offset. It is worth whatever her tax rate is on the dollar.
posted by JohnnyGunn at 8:45 PM on March 5, 2010
posted by JohnnyGunn at 8:45 PM on March 5, 2010
Best answer: IANYL, TINLA.
Seconding putting "Australia" before the cut, and possibly in the tags as well. Maybe "Victoria" or "Melbourne" as well--I have no idea whether the applicable laws are different from state to state in Australia, but they are in the US, where I am.
I did find a legal referral service on the Law Institute of Victoria website. It looks like they offer a free 30-minute interview to start with. I have no experience with this, but a local legal referral service or bar association is one way to get more information on getting started. Good luck!
posted by tellumo at 9:20 PM on March 5, 2010
Seconding putting "Australia" before the cut, and possibly in the tags as well. Maybe "Victoria" or "Melbourne" as well--I have no idea whether the applicable laws are different from state to state in Australia, but they are in the US, where I am.
I did find a legal referral service on the Law Institute of Victoria website. It looks like they offer a free 30-minute interview to start with. I have no experience with this, but a local legal referral service or bar association is one way to get more information on getting started. Good luck!
posted by tellumo at 9:20 PM on March 5, 2010
Response by poster: Thank you, all better suggestions than mine and will be passed on.
posted by Wantok at 10:58 PM on March 5, 2010
posted by Wantok at 10:58 PM on March 5, 2010
IANAL but does the note Mofo signed indicate a timetable or terms of repayment? If not, Lady may find it difficult to enforce. At least in the US, a loan without terms is practically not a loan in the eyes of most courts. The debtor simply comes in and says they were told to repay when convenient and that it hasn't been convenient thus far. If the loan document doesn't say anything contrary to that, the lender tends to be out of luck.
posted by MasterShake at 11:45 PM on March 5, 2010 [2 favorites]
posted by MasterShake at 11:45 PM on March 5, 2010 [2 favorites]
You want this as a starting point, which will lead, as k8t suggests, to small claims court. Contrary to Dasein's comment, your friend will not require a lawyer for small claims court.
posted by rodgerd at 11:49 PM on March 5, 2010
posted by rodgerd at 11:49 PM on March 5, 2010
Not sure how this works down there, but in the US, you can forgive a debt and report it to the IRS, who treat it as income for tax purposes. The IRS *will* get it's 800 or so dollars of that. Doesn't help your friend, but it does count as a bit of vengeance.
posted by kjs3 at 1:34 PM on March 8, 2010
posted by kjs3 at 1:34 PM on March 8, 2010
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posted by k8t at 8:39 PM on March 5, 2010 [1 favorite]