Whether you lent a friend some money, bought something with your credit card for them because you had a better credit rating or took out a loan for them, if they’re not paying you back it sucks. Research shows that nearly a third of people have fallen out with a friend or family member over an unpaid debt, but before you take legal action, you need to consider two things if you are likely to win your case and if your friend has the money.
You need to decide if it’s a sensible thing to take legal action and how you would do it. Can you prove that you are owed the money because to win a case, you need to have some evidence that your friend owes you money. It doesn’t have to be a written legal contract, with witnesses, etc. as suing someone for money is a civil case and the judge will decide who wins “on the balance of probabilities,“ looking at whose story seems most likely. A spoken agreement is a valid legal contract. However, there still needs to be something you can show. If you gave your friend cash and no-one saw you do it, then it’s going to be a bit tricky.
Was it a loan or a gift? Your friend might say that it was a present, but does it seem plausible? People don’t usually give friends furniture or a car as a gift, but partners, however, do give each other gifts, and sometimes expensive ones. Parents may even give a child a deposit for a house. If a gift seems plausible, again the critical facts in a court deciding between a loan and a gift are likely to be whether there is any written evidence that the money was due to be repaid and whether any repayments have been made.
Can your friend afford to pay you back? If your friend has no money or assets, there is very little point in taking them to court. While you might win the case, it still doesn’t mean they have the money to give you, or they could end up giving you a minimal amount per month. There are ways that you can “enforce the court judgment” and get the money that you are owed, but these will all cost you money and may well not work.
When it comes to a relationship with a friend, mediation can be an excellent way to go. Mediation is when an impartial person – trained in dealing with difficult discussions between two opposing sides – acts like a referee in a dispute. Mediation can cost money, but it is cheaper than hiring a solicitor and taking court action. The price will be based on how much is owed, and you can have a look online to find out more information, someone like Judge Diane Ritchie specializes in this sort of thing, there is plenty of information on her website.
Get legal advice before doing this if you’re unsure about anything as different circumstances mean different options.