Are You Considering Lending Thousands Of Dollars To A Friend Or Family Member? What To Know First
Have you been approached by a friend or family member about borrowing money, and you worry that you won't get the money back, or that you could end up in an uncomfortable situation? Do you want to help the person in need, but you also want them to understand that you are serious about setting up regular payments, and that you expect to get the money returned? If so, you should meet with a lawyer to draw up an agreement about the transaction, so there is an outside party to verify the transaction. Here are a few things to consider.
Get a Formal Agreement
Don't print off a document you find on the Internet, and then hope that it's binding. Instead, have a lawyer draw up the contract with the exact details of the transaction that's going to take place, and then have it notarized by someone in the legal office after the transfer of money takes place. This way you aren't put in a bad situation if the borrower claims they never signed anything, and if they claim that they were forced to sign the agreement.
If you want to have interest added after some time, or if the payment plan is set up with strict dates, the lawyer will include all of this information in your agreement. The borrower will know if there are complications they can be taken to court.
Save Copies of the Transaction
Have copies of the withdrawal slips added to your case file with your lawyer, and have the borrower have a copy of the deposit slip added. This shows that the money came out of your account, or that the check was written, and then that it got deposited into their account. Once the borrower starts to pay you back, make copies of the payments for the files. This makes it easier to keep track of what is still owed.
You can give the person the help they need, without allowing them to walk all over you or get money that they don't want to pay you back for. Instead, meet with a financial lawyer and then ask the borrower if they would be willing to sign the agreement before you give them anything. This will show you if they are serious about needing the money and wanting to pay it back, and it will help them become more responsible when borrowing in the future.
Share