Just before the pandemic, I ran into financial difficulties and my brother loaned me $10,000. During the pandemic we fell out and we didn’t speak to each other for several months. We now communicate through our sister.
He now says he wants all the money back even though we had an agreement that I would pay him $200 a month and so even though there’s no agreement on paper I’m wondering how I should go about it because he the money demands. I do not have it.
I’m really angry. Of course now I wish I hadn’t borrowed the money and I wish I could get the money from somewhere else to give to him so I could just get rid of him but I’m in no position to do that . What can I do?
Sister in debt
When lending money to a family member or friend, it’s always a good idea to have the person sign a promissory note outlining the terms and duration of the loan. In this case, it sounds like you had a verbal agreement. You don’t intend to forfeit the loan, but you want your brother to honor the original terms of the agreement: $200 a month.
Verbal agreements are binding in many states, including New York and Florida, but do not include real estate, among other restrictions. In Florida, such agreements must meet legal standards for contract formation and, of course, you must be able to prove that you have entered into an agreement at all, including an exchange of value.
Proving a verbal agreement is another challenge: as Kimberly Schultz, a Plantation, Florida-based attorney mention, that: “This is where it gets difficult. In the event of a dispute, you need proof that a contract has actually been concluded. If it was a verbal agreement, it’s a situation where one person’s word is against the other.”
“Who to believe? If in doubt, and if you have a choice, always get something in writing,” Schultz said. “A written contract can be scrutinized and dismantled, and helps resolve disputes quickly. It is always preferable. But now you’ve made it. You have entered into an oral contract. What can you do?”
The good news is that you want to honor your agreement with your brother, even if he uses your personal dispute as a bargaining chip to pressure you—emotionally and financially—to pay back the rest of the $10,000. You may have an email chain or other witnesses that confirm this loan and your payment schedule.
Few families have members who have not fallen out at some point in their lives, and I expect this situation will resolve itself over time. But there’s a lesson in borrowing money from family and/or friends as a last resort, because the relationship—and any pre-existing problems in the relationship—will inevitably make things difficult.
Money, if we have enough of it to pay our bills and hopefully save, can bring peace of mind and quite a bit of freedom to make decisions about our lives and futures, but unfortunately it can also be used to control and punish people them as you experience it now. He’s unreasonable.
Separate your personal relationship from your financial relationship. Assuming you don’t have good enough credit to take out a loan from your bank to pay it off in full today, tell him that the two issues should be treated separately. Remain calm and factual. Stick to your original plan.
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