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Alex J.
Alex J., Solicitor
Category: Law
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Experience:  Solicitors 2 years plus PQE
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Hi, Some background, and I apologize in advance for the length

Resolved Question:

Hi,
Some background, and I apologize in advance for the length of this question.

Nearly seven years ago a well off friend of the family (and my wife's boss at the time) let us have £50000 to put down as the deposit on a house. He always insisted there was no need to hurry to pay the money back, though my wife & I always felt and insisted that we should as soon as it was financially possible.
Since then my wife was made redundant and we struggled initially to make ends meet as you can imagine in the current financial climate. In the end my wife was out of work for more than a year and during that time we lived off my salary and my credit cards to make up the difference.
The result of being out of work was my wife received a CCJ on her credit file. We have since settled this debt, but obviously the CCJ remains on her credit file for a period of time.

In the last few months we have tried 4 separate lenders to try to re-mortgage our property, all of which have turned us down due to the CCJ. During this time we have kept this friend informed of what we are trying to do. And at each step explaining the reasons this is not going to be possible to resolve for a while.

it turns out this friend apparently closed his company, and has proceeded to spend all his money over then couple of years through gambling etc, and is now desperate.

Recently we received a letter from his solicitor threatening to take us to court unless we pay this money back, they are stating that they have a promissory note. This note takes the form an email that has apparently come from myself and my wife stating that we said we would pay this money back within 5 years.

I know that neither I, nor my wife have never signed any promissory note. Though as I previously stated, we had conversations with our friend regarding our intention to pay this money back as soon as it was financially possible, even though it was not presented to us as a loan that need to be paid within any specific time scale.

It is still our intention to repay this money, because it's the right thing to do, but we are still unable to re-mortgage.

Where do I stand ? Should I go to court ? we have tried to explain the current situation to him numerous times. I also believe this promissory note to be fraudulent, it would have been very easy over the years to send an email from our home computer, as this friend spent 2 or 3 days almost every week at our home over the period of a couple of years.
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi,

Thank you for your question and welcome.

My name is ***** ***** I will assist you.

Firstly I am afraid you can go to court for. You have the benefit of the loan and unless he tries to sue you for it, then there is really nothing you need to do.

Do you have anything in writing that says you will repay the money when you can afford it?

Kind regards

AJ
Customer: replied 2 years ago.

Hi AJ,


 


I appreciate your response on this.


 


There was never anything in writing that specifically said we would pay it back when we could afford it.


 


It was mostly verbal discussions. The conversations mostly went along the lines of "Martin, we want to pay this money back as soon as we are financially able to"... and his response was always "don't worry about the money, it's fine".


 


This was quite a long time ago, there may also have been emails that said basically the same thing. I'm assuming one of these is the aforementioned promissory note.


 


But there was never any promissory note signed by either party, of that I am certain. Having looked again at the note provided by his solicitor, it is not even an email, it is a word document, unsigned, dated 12 May 2007, saying we would repay the money with 5 years of the date of the letter, there is also no mention of interest, and I have no recollection of this document.


 


Our original hope was to pay the money back as soon as possible, regardless of Martins feeling about the money hopefully within 5 years, however that was just before the current finiancial depression, and the house prices dropped quite significantly. They are only now starting to recover, but we can't now re-mortgage because of the CCJ.


 


 


Regards


Barry


 


 

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.

I am afraid that there is nothing that can be done about the CCJ, it is on the credit file and you will just have to wait for it to be removed. After 6 years it should go anyway. In the mean time you will just have to do your best to find a bank that will lend.

In relation to the debt, a promissory note is just a contract, it is really irrelevant as the debt was already due and owing. The only effect it would have had would have been to confirm a repayment date, this would have to have been validly signed as a contract or deed to be effective. It does not sounds as if this note would be enforceable as it is not a valid contract or deed.

If it was always agreed you would repay when you could afford it, then he has no real ability to force you to sell the house or repay the debt. If he tried to sue you, you would have a potential defence of what is known as "Promissory Estoppel". This is where you have relied on a promise to the extent that if the promising party changes their position to your detriment, they can estopped from doing this. I suspect this is why this individual has not attempted to sue you.

Is this individual likely to go bankrupt? I look forward to hearing from you.

Kind regards

AJ
Customer: replied 2 years ago.

Hi AJ,


 


I am not sure if Martin will go, or is already bankrupt, I do know he not working and hasn't worked for a number of years, so I can see no way for him to pay any of his bills.I assume this is the reason this is all getting nasty now, as he needs the money.


 


We have done our best to get this money repaid, and even with the threat from his solicitor to take us to court, it is still our intention to repay it, as it's the right thing to do. But short of printing the money myself I don't see what other options I have right now.


 


There is no mention of any interest that would be paid in regards ***** ***** money, either in writing or verbally, but I would have paid him something in appreciation for the help.. however the solicitors letter I have received is saying that the £50000 attracted a fee of 25% so the total amount he is requesting is £62500.


 


I was unaware of any fees attached to this money at the time.


 


So this promissory note is not enforceable ? .. does a promissory note need to have a handwritten signature to be binding ?


 


Apparently I must reply within 14 days, either to contest this or satisfy the debt, if they don't hear from me within that time they will "afford me the opportunity to file a formal defence at court".


 


Regards


Barry


 

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.

Have they actually issued court proceedings?

Kind regards

AJ
Customer: replied 2 years ago.

AJ,


 


sorry, I missed your reply.


 


No - no proceedings as yet, they want to know if i will contest this, or give a proposal to settle the debt.


 


If I don't reply within 14 days - they will start proceedings, at least that is what I understand from the solicitors letter.


 


However, I have already told Martin, what the situation is, we are trying to re-mortgage the house. Not sure how many times I need to tell him this.

Expert:  Alex J. replied 2 years ago.
Hi,

I am afraid there is not really much you can do, it is their prerogative if they want to start proceedings.

You can only write back and say that the money is not due and owing currently as this is not what was agreed, say that any attempts to demand the money from you may be "estopped" as you acted in reliance that the money would only be repayable when you could afford it.

I would strongly recommend going to at least speak to them, because if he goes bankrupt, a trustee in bankruptcy will potentially be able to pursue you for the money.

Kind regards

AJ
Alex J., Solicitor
Category: Law
Satisfied Customers: 3557
Experience: Solicitors 2 years plus PQE
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