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My brother-in-law’s house was foreclosed. I have money that can be used in the annuity account, so I paid off the house so they don’t lose it.
We signed an agreement and he will pay me, but he has not paid me any money since last year. He still owes me more than 92,000 dollars. I basically gave him an interest-free loan of $100,000.
I don’t want to sue him, but his wife thinks they should not repay me. I have now lost more than $50,000 in bonuses, which should have been credited to my account except for the money they still owe me. please help.
-Unlucky in Kentucky
Dear misfortune,
You saved your brother-in-law’s house from foreclosure, which is really a very kind thing. In a perfect world, your brother-in-law will be motivated to give you back out of gratitude. But in fact, many people who lend money to their family members get exactly the same gratitude as you get.
Consider from the perspective of the borrower. Imagine if the bank never sued anyone who failed to pay. What if they will not charge you fees or interest in addition to interest no matter how late you are? How much debt do you think will be uncollectible?
From the perspective of the borrower, this is usually the case when family members lend money to them. If they do not repay the money, there will be no consequences. Most importantly, because you are wealthy enough to provide financial assistance, it is easy for borrowers to tell themselves that you don’t really need the money.
The good news is that you have the foresight to get your brother-in-law to agree in writing to pay you. However, the agreement will only work if you are willing to grit your teeth. If you have any hope of getting the money back, you need to brush your teeth. Your brother-in-law and his wife obviously don’t believe you will stick to the agreement he signed.
Provide them with a copy of the agreement. Tell them that unless they resume payment, you have no choice but to take them to court. If your brother-in-law is the sibling of your currently married person, your spouse needs to discuss with you. If they still refuse to pay, hire a lawyer to send a certified letter requesting payment.
I hope you don’t actually have to sue here. But in this case, nothing will change unless your in-laws see the potential consequences of not paying back the money.
Taking your brother-in-law to court may be your only hope of getting the money back. If you are willing to repay his mortgage, you obviously care about your brother-in-law. If the relationship has not been damaged beyond repair, you need to weigh the importance of the relationship to you and the money you want to recover.
Unfortunately, if litigation is required, you also need to prepare for the family drama. Hope that others will understand that this is not a gift, but a loan that you are not obligated to provide. But some people may think that you are the bad guy suing your family, especially when your brother-in-law and his wife are still struggling.
I think you need to plan well, as if you won’t get the money back. The lawsuit may take a long time to resolve. In addition, if your in-laws are penniless, it may be difficult to collect according to the judgment. Ask them to agree to pay some monthly fees, even if the amount is less than the amount you agreed, it may be better than taking them to court.
The classic rule of borrowing money from family and friends is, don’t do it unless you can afford it as a gift. You are certainly not the first to learn this lesson the hard way.
Robin Hartill is Penny Hoarder’s certified financial planner and senior writer.Send your tough money questions to [email protected].
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