Tradie’s insulting act after taking $5k
Welcome to Sisters In Law, news.com.au's weekly column solving all of your legal problems. This week, our resident lawyers and real-life sisters Alison and Jillian Barrett from Maurice Blackburn advise what to do when a family member borrows money and doesn't pay it back.
Question: My brother borrowed money from me a while ago after he hit a hard time. He's a tradie and cashflow can be can be a problem for him. He needed to pay his rent so I lent him $3000 to get through the month and then another $2000 the next month. I didn't make it official or anything as he said he'd pay me back and he's family.
Six months later and I still haven't seen the money. He's working again and goes out most weekends to the RSL where he drinks beer and feeds money into the pokies. The insult of it!
I've reminded him a few times that he owes me money but he always says he'll pay me back "later".
I'm in a tight spot myself and really need it. What's the best way for me to get my money back without involving the police? I love him and he's my brother but he needs to pay up. - Jessie, Qld
Answer: Loaning money to family and friends is something most of us wouldn't think twice about. We all want to help our loved ones when they are in need.
However, loans to family and friends come with risks beyond not getting your money back and are associated with potential relationship strain and sometimes a relationship breakdown.
Your rights when a family member doesn't pay you back
The agreement between you and your brother is a contract (with you as lender and him as borrower) which is enforceable under the law, even if you have not made it in writing.
There is a risk that your brother will say that you gifted him the money, with no expectation of it being repaid. Be prepared for this response, together with any evidence you have from him in which he says he will repay the money. Otherwise, it will be his word against yours.
Generally the police would not get involved in a matter like this. Instead, you should access civil remedies through a tribunal or a court.
The first thing you will need to do is send a letter of demand to your brother, setting out the amount you are owed and asking that it be repaid within a certain time frame, otherwise legal action will be taken.
If there is no response to your letter of demand, you can lodge a claim in the Queensland Civil and Administrative Tribunal (QCAT) to recover the money owed to you. This is called a "minor debt claim".
Before doing this, make sure you have all of the evidence collated about the amount loaned and your requests for repayment.
This could be bank statements, text messages or emails between you and your brother.
To lodge a claim in QCAT, you must prepare a claim document which has:
1. The full name and address of your brother;
2. Details of the debt, including the date and place it happened, the amount, the terms of the agreement (including when it was to be paid back and whether it was a written or verbal agreement);
3. Any supporting documents and evidence;
4. Details of the amount you are trying to recover, plus any additional costs or interest;
You must then serve the claim on your brother. You may be required to prove to QCAT that you provided him with the documents (for example by sending by registered mail).
Your brother is required to respond in "defence" of the claim.
If he doesn't respond, you can ask QCAT to decide in your favour.
If he does defend the claim, you will be required to attend QCAT and argue why you should be repaid. You don't need a solicitor to do this.
If, ultimately, the debt is ordered to be repaid then your brother may agree to repay the debt in instalments.
If the debt is not repaid, then you may make a further application to a court to:
1. Seize and sell your brother's property.
2. Redirect debts - if your brother is owed money by someone else, this can instead be ordered to be given to you instead.
3. Redirect earnings - your brother's employer can be ordered to pay most of his wage to you leaving only necessary living expenses (money for gambling or drinking would not be seen as necessary)
4. Redirect other money - if your brother has money in a bank account, or is due to receive money for say rental income, then this can be paid to you.
5. Petition for the bankruptcy of your brother.
If he repays some of the debt, always keep a record and provide a receipt to him.
Electronic transfers or a bank cheque are often a safer option than handing over cash.
There are strict time limits for recovering a debt, so you should not delay in taking action.
This legal information is general in nature and should not be regarded as specific legal advice or relied upon. Persons requiring particular legal advice should consult a solicitor.
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Originally published as Tradie's insulting act after taking $5k