Every week, the Money blog team answers a reader’s financial dilemma or consumer problem – you can WhatsApp us here or email [email protected]. Today’s is…
A neighbour has borrowed more than £1,000 from me with the promise to pay me back by the end of the month. Nothing has been forthcoming. I’ve sent her texts asking for her to let me know when she is putting it in to my account… no answer at all. What are my legal options?
Tony, via comments box
Thanks for your message, Tony – I wish I had a neighbour as generous as you.
From what you describe, there was an oral agreement here, which isn’t the best grounding to get your money back.
The neighbour might argue that there were no particular payment terms (so that the loan is not due by the end of the month) or even that there was no loan at all (that the money was instead a gift).
It would then be up to the court to decide on the evidence whether a loan existed and what its terms were.
I spoke to solicitor Alex Kennedy, a dispute resolution expert at Gannons, to get some firm guidance for you.
“Evidence of messages, bank payments etc are so important,” he says.
“If there are no documents at all, the person who is owed the money could still present their case, it is just the trial judge would be weighing their witness evidence against that of the borrower.”
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So what can you do now?
Kennedy says the most obvious legal route now is to send a formal letter before action to your neighbour, setting out:
This can be done by you or a solicitor and could well prompt your neighbour to cough up.
“Tony will need to bear in mind whether the relatively small value of the loan means that instructing a solicitor is a disproportionate expense, especially given that it is unusual to recover legal costs in respect of a small claim,” Kennedy says.
“If the cost of a solicitor is considered to be excessive, we would still recommend that the person who is owed the money drafts a letter before action themselves.”
If your neighbour is still not budging, there’s the option to issue a claim online via the Money Claim Online service or through the local county court.
The claim fee depends on the size of the debt (for £1,000-£1,500 it is currently £70 if issued online).
If successful, you will obtain a county court judgment.
Kennedy says your reader can enforce the judgment in several ways, including:
“Interest and some legal costs can be claimed as part of proceedings, but as I have set out above, they may be limited given the value of the debt,” Kennedy says.
Of course, only you can decide whether taking any of these steps against someone you’ll be seeing all the time is the right way to go.
Good luck with it!
This feature is not intended as financial advice – the aim is to give an overview of the things you should think about.
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