TAS Forced repayment of debt

[Sheree]

Hi,
Sorry this is going to be a long one, I will try to keep it as short as possible.

We lent a family member $100,000 (+10% interest), this was due to be paid back last November 2021 - here we are today, and they have only paid back $27,500.00.

The family member is in the middle of a separation now, and we are mixed up in their messy settlement.

They keep saying that they are waiting to sell assets to pay us back, yet here we are now 12 months waiting.

I have been to a lawyer, they tell me that I can go to the supreme court to get a ruling (bearing in mind that I already have letters from their lawyers saying that they intend to repay the funds as soon as they can, but there is no date of when this will be) and judgement. However the court is not able to force them to sell assets to repay the debt?

Is there any real benefit in going to court in this case, apart from it costing us around $10k in legal fees (already spent close to 3K), it doesn't sound like we have any hope in getting our money back any sooner. They may be able to force the payment of interest on the monies overdue, but that would not even cover the legal fees we would be up for.

The lawyer said we could place a Caveat on their property, but this sounds like we still can't force the sale of that property to get our money back.

It sounds like we have no real power, and that we are their mercy of when they repay us.

Is it worth the cost to take this to the supreme court, when we may not be in any better position that we are now?

 

[Atticus]

The lawyer said we could place a Caveat on their property

I assume you have an eligible caveatble interest in the property if your lawyer has suggested it ... I would go ahead & do this. It won't force a sale, but will act as an alert to you if thee is any dealing with the title. Also a flag to potential purchases that there is a caveat over the title.

IF the separation should end up in the family court, depending on your circumstances, you MAY be able to become a party to proceedings ... Ask your lawyer if there is anything in >>> http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/fla1975114/s90ae.html?context=1;query=third party debt;mask_path=au/legis/cth/consol_act/fla1975114 That you may be able to use to your advantage should it end up in family court

 

[Sheree]

I assume you have an eligible caveatble interest in the property if your lawyer has suggested it

Well I am not sure, the loan didn't hold any real estate as guarantee so to speak. I think they meant that we could apply to the courts for one if we have the judgment in our favour.

 

[Tim W]

Couple of things -

1. I'm assuming in the remarks below that
   you do not have any kind of recorded agreement about the terms and conditions of the loan.
   I'm also assuming that you did not insure the debt.
   
   
2. How much do they actually owe you?
   To put it another way - what's The One Number
   that they would have paid you, all in, all said, and all done,
   if everything had gone according to plan?
   
   
3. The interest - is that 10% a year? Simple or compounding?
   Or, do they just owe you 110% of the original amount borrowed,
   no matter when they pay it eventually back?
   
   
4. What arrangement did you make for when it was, or couldn't be paid back?
   
   
5. A caveat may indeed be an option.
   Just bear in mind that caveats are injunctive in nature, and do not create a priority charge nor security over the debt.
   Particularly if the debt itself is unsecured.
   
   
6. Have you considered asking them to pay interest-only, until they get the Property Settlement sorted out?
   
   
7. Being an intervenor in a future Family Court proceeding may be an option.
   But you've already voiced an aversion to spending any more money,
   and that will certainly cost several thousand dollars.

 

[Sheree]

Couple of things

1. The terms were 100,000 over 12 months with 10% interest payable. So all up he would repay 110,000.

2. It was not secured (silly I know, lesson learnt), didn't think family would screw me over.

3. The arrangement was for only 12months we have this in writing.

I have just received a letter from our lawyers, just to issue them and apply to the court 5k.

I just doesn't sound like the court will be able to force them to pay it back any sooner.

 

[Tim W]

It just doesn't sound like the court will be able to force them to pay it back any sooner.

Well....

Court or no court, if they don't have, then they can't pay it.

Further, the waiting time to get to court could be
longer than the time it takes to sell and settle the house and then repay you.

I can't comment on the reasonableness or otherwise of the quoted fee.

 

[Sheree]

Court or no court, if they don't have, then they can't pay it.

Oh they have the assets, just not the cash!

 

[Atticus]

I think they meant that we could apply to the courts for one if we have the judgment in our favour.

$5K just for an application could easily turn into $10K with no guarantee of getting paid even if you get a successful debt judgment ... There's also the *possibilty* of there being a jurisdictional conflict if the judge decides the joint assets bound up in the debt should best be dealt with by family law ... Maybe ask your lawyer about the risk of that happening before you lay down $5K

 

[Sheree]

no guarantee of getting paid even

Well this is my point, what is the use of going to court if a court can not force someone to pay back their debt!

My husband is beyond sick of it, and is pushing to go go court, simply to make a point and to have them realise that we will not be pushed around anymore.

My concern is that even if we spend 10k on court fees and lawyers, will this make a difference, it sounds like it will not, then the courts have no real power!

We have done nothing wrong, yet are left to try and claw our money back from someone who has lied from the outset, and we will be worse off at the end than we would have been if we had simply not lent the funds in the first place! The justice system in Australia is a joke.

 

[Atticus]

My concern is that even if we spend 10k on court fees and lawyers, will this make a difference, it sounds like it will not, then the courts have no real power!

IF you are successful in getting a judgement debt, it will only be against the individual you borrowed to, & it's likley you will need further court action to have it enforced ....

My concern with that is if the borrowings are tied up in a joint asset & the separating couple can't or won't come to an agreement, then it may finish up in family court. In that event having a judgment debt in hand will be advantageous to you as the creditor .. It will mean you will have to become a party to the FC proceedings. You can self represent in FC.