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Well it was an electronic transfer into his account. So the transaction is traceable. But as far as I know, there was no agreement on a payment date, or an interest rate. And nothing was made in writing. Small claims is an option but I don't see what good that would do if they have no assets. their huge home has been repossessed, cars are now worthless. I don't know. I'm hoping one of these "deals" does go through and at least my mom can get some money rather than no money but that may just be wishful thinking.
They are totally deflecting. When I spoke to them, they were talking about how much my mother's words hurt them and how much she humiliated them. When I explain my mother's situation, they're like well... yea I understand... she'll get her money but now we just have to stay away from her. They're the victims apparently.
Sounds like, they have no money. They have no resources. They have nothing of value.
What that means is:
Your mom gets no money. Your mom can not come after their resources. She gets nothing of value back from them.
Do nothing. You didn't loan the money, so it's not yours to collect. When I loan money (rarely,) I do so with no expectation of being paid back, so I'm sure that I don't loan (give) more money than I can afford. I mentally consider it a gift. That way, I don't get angry if it isn't repaid, the relationship isn't damaged, and if it is paid back, I am pleasantly surprised. If your mom chooses to pursue this matter legally, she is the person who will have to sue them.
I'd never be there in the first place. It's either a gift or its not given.
But if I somehow were in your mother's shoes, I'd either
1) let it go if it's an amount that I can afford to let go and as Stan mentioned claim it as an "unrecoverable debt" on my 2015 tax return.
2) or if the amount is within the jurisdiction of small claims court, (about 5K, varies from state to state) I'd file suit but only if I'm done with that relationship because that will almost certainly kill it.
3) I'd have you mediate a payment plan, an affordable sum each month to repay the loan and definitely put that in writing and all cash exchanged needs to have a paper trail.
4) Last and least, keep hanging on waiting for them to come through which seems unlikely.
Your mother buys into this problem though. You warned her and she went ahead and used poor judgement with her money. I have found that a lot of people that "live large" often enough are mortgaged to the hilt, living from deal to deal. If one of those folks tries to tap a family member or friend, you can pretty much take that assumption to the bank. Sorry about this situation but both parties were/are foolish with their money.
A long time ago I decided to never "lend" to family or friends.
I always give and make it clear that the money is a gift.
This ^^^.
When you lend money to family and friends, you are making a gift. Yes, there are (rare) instances where the money gets repaid, but the relationship is too "friendly" and nobody wants to hurt anyone's feelings. Then it turns into the "lender" is a bad person (and phone calls don't get returned) because they "meanly" are asking to be repaid.
You can somewhat ensure a degree of formality by creating a promissory note or attaching collateral to the deal (but hey, "it's me, your cousin/Uncle/friend--we don't need a note; you know I am a good person"....yeah, okay...) but really, now YOU are the "bad" person suing your family in court.
It's a gift. Assume it right from the start. What to do now? Nothing. The money is gone; you will never get repaid. Put it out of your mind, however difficult, and consider it a lesson learned. Any other strategy will end up costing you MORE money, and will take a mental toll (angst) of which you have already had enough, I suspect.
When I explain my mother's situation, they're like well... yea I understand... she'll get her money but now we just have to stay away from her. They're the victims apparently.
They do have a point here. Your mom doesn't need their excuses or apologies, she needs her money. There is really nothing to be said. Words will not do any good here, just the money.
Well it was an electronic transfer into his account. So the transaction is traceable. But as far as I know, there was no agreement on a payment date, or an interest rate. And nothing was made in writing. Small claims is an option but I don't see what good that would do if they have no assets. their huge home has been repossessed, cars are now worthless. I don't know. I'm hoping one of these "deals" does go through and at least my mom can get some money rather than no money but that may just be wishful thinking.
They are totally deflecting. When I spoke to them, they were talking about how much my mother's words hurt them and how much she humiliated them. When I explain my mother's situation, they're like well... yea I understand... she'll get her money but now we just have to stay away from her. They're the victims apparently.
A small claims court judge may decide that there was a verbal contract to pay this money back.
You may want to check small claims court limits in your state. Filing a claim is fairly straightforward. You just come in front of a judge and explain what happened.
Do you have any recordings of them saying they owe the money they are just not paying it back now?
Everyone talks about family. Family is supposed to be there when times are tough and it certainly sounds like your uncle and aunt are having tough times. So I think its nice that you and your mom helped them out. Its unfortunate though that your mom didn't follow your advice about only loaning money she could afford to give.
Its most unfortunate that reations don't seem close enough to really figure out your mom, aunt and uncle can all get through this together supportively somehow. Joint decsions based on whats really going on.
I think there needs to be some frank talk in a mutually suppotive envionment.
The red flags and alarms ringing should have gone off when wealthy people who seem to have "everything" come to people who don't have much to borrow money.
If they are so successful, where is their line of credit, why can't they get a bank loan and why did they pick someone who's considered an easy mark to borrow from ? That's what should have gone through her mind.
A sob story always has a unhappy ending. Don't let a drowning person take you under with them.
The five characteristics of the borrower that banks use and need to be condsidered when attempting to gauge the chance of default risk are called The five Cs of credit which are: -Character -Capacity -Capital -Collateral -Conditions.
She only used Character and the appearance of Capacity, Capital, and Collateral and then ignored Conditions by not asking what could be considered embarrassing questions which then became a cause of embarrassment for her..
It's a tough lesson to be schooled by people that you care for.
Last edited by NickofDiamonds; 08-07-2015 at 09:16 AM..
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