# Friend who owes money



## Fain (Oct 11, 2009)

I'm 23 and have a friend who owes me money(around $5,000) but lacks the drive to save $$$ or put money aside to pay me back. Is it possible to get someone to take out a $5,000 car loan to buy a car in their name and then i buy it off of them for $1 dollar??? Any legalities involved in this?

I'm also considering using TheBrick.Ca, Leons.Ca or Dell Financing if the car idea doesn't work for me. But ideally i would want the Debt changed into a Car rather than a bunch of furniture or electronics.


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## Soils4Peace (Mar 14, 2010)

When I lend money to a friend I write it off at the beginning. I don't count on being repaid.


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## slacker (Mar 8, 2010)

If you're going to be breaking the law in order to get the money back ... well let's just say a lot of options become available.


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## andrewf (Mar 1, 2010)

They can get a line of credit. The car loan idea is not a good one. For one, you have to pay 8% on the fair market value of the car twice. For two, the car would probably have a lien on it, and the loan would need to be repaid when the car is sold. If it does not have a lien on it, it is the same as a line of credit (LOC), so they can just do that.

People never learn this lesson.

"Neither a borrower nor a lender be; 
For loan oft loses both itself and friend, 
And borrowing dulls the edge of husbandry."

-- Polonius, _Hamlet_


Frankly, if this person were a friend, they would pay you back. If they haven't, despite having the means, then they aren't much of a friend.


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## w0nger (Mar 15, 2010)

i have lent out money many times to friends, everytime i make them sign a promissory note for the amount, determining re-payment terms and interest. There's a reason why they couldn't get a loan from the bank, so if i have to take on the risk, i need to be a little protected. The promissory note has very little legal power, but it's the thought that they signed it that gives them motivation to stick with the agreed upon terms.

it's business; not personal.


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## carverman (Nov 8, 2010)

andrewf said:


> They can get a line of credit. The car loan idea is not a good one. For one, you have to pay 8% on the fair market value of the car twice.


This is one of the hidden "gotcha!" by the MOT. Unless the friend is a 
relative or the vehicle is passed on through a estate bequeath, where the
receiver of the vehicle is a family member, the MOT will go by the 
current blue book value of the vehicle for sales tax purposes. 

I once had a used car given to me by a father in law.
He had to sign a form from the MOT, so did I, for the "vehicle as a gift"
and the value ($0). Also, on this form, it stated that filling out the form,
even though the ownership can be transferred, does not exclude the buyer from paying PST on the vehicle, if the MOT determines that tax is payable later on.
(I presume that applies to any falsified information in regards to
selling price or nature of the gift ($0) transfer. 



> For two, the car would probably have a lien on it, and the loan would need to be repaid when the car is sold. If it does not have a lien on it, it is the same as a line of credit (LOC), so they can just do that.


Correct! I had my truck finanaced by the dealer through a bank and I
was paying 8% interest on that loan. When I decided that I didn't
want to continue with monthly payments and pay off the bank, the bank
took the check for the balance and later on issued me a "discharge of
the lien", so that the vehicle was NOW free and clear.

If someone tries to buy a vehicle privately through "some scheme", the
other MOT "gotcha" is the lien paper.. the form from MOT that they charge $20 for. It will indicate previous owners, all liens and current mileage of that vehicle.

You cannot transfer ownership until the lien is cleared, 
whether it be a mechanics lien or bank lien, or any other type of legal lien registered
against the vehicle.


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## financialnoob (Feb 26, 2011)

Does he have to pay you back $5K at once? It sounds like he lacks the skills to save up that type of money, but clearly he earns enough to support payments, so why not ask him to give you $250/month or whatever number you two work out until he's clear? Maybe take some post-dated cheques to simplify.

It gives him 0% interest on paying back the debt which is more than reasonable and fair. And you get your money back, albeit slowly. But whenever you loan money to friends, it's doubtful you'll get any of it back.


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## Cal (Jun 17, 2009)

If you really think you wil get your money back, and are unwilling to forget about it, then consider having them get a loan to pay you back, or take them to court, hopefully you will have paperwork to support your allegation.

Youd didn't mention in your post if you need the money immediately or if you would be satisfied w an arranged payment plan or anything.


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## OhGreatGuru (May 24, 2009)

Fain said:


> Is it possible to get someone to take out a $5,000 car loan to buy a car in their name and then i buy it off of them for $1 dollar??? Any legalities involved in this?
> 
> ...


1. If he can't pay you back now, why would anyone lend him $5K?
2. I've never borrowed money for a car, but I presume that most times it is "attached" to the car (as a lien or some such) until the loan is paid off. So your friend can't legally transfer the asset to which the lien is attached unles you assume responsibility for the loan. The asset is the security for the loan.

(And from the sound of things no one is going to give him an unsecured personal loan. You gave him one, and look how well that worked out.)

I don't know what your chances would be in Small Claims Court if you don't have a prommisory note. All he has to do is deny it and it becomes your word against his.


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## carverman (Nov 8, 2010)

If it was just done on a "gentleman's/friends" verbal agreement, his chances
of recovering anything in court is very dubious. Judges need proper paperwork
to base the merits of the case and arrive at a decision. Filing a unsupported
case in small claims is just a waste of the filing fee..because it comes down
to a matter of "he says...vs..he says".

Verbal agreements (typed up by the lender later) can be filed as a sworn statement affidavit surrounding the nature of the case submitted to the small claims court.
But this has to be notorized by a commissioner of oaths to certify that the information 
contained in the sworn affidavit is true, otherwise (generally ) it won't stand up in court. 
The borrower could attempt to refute/disprove any or all of it.

However, a copy (or the original) check for the loan from the lender to the borrower, submitted as evidence, duly notorized by a commissioner of oaths (lawyer etc) could help his case in small claims. 

If it was a cash deal done on a handshake and a thank you..good luck with that,
if the friend turns out not to be a true friend. 
I know from my experience with ex-wives..your "best friend" can turn out to be
"your worst enemy" in court. 

Even a promissory note submitted as evidence as a document in a sworn affidavit
may not hold much much water in small claims because it would just mean that the friend would have signed a note (when his financial circumstances were different at the time), stating that he acknowledged the loan and would repay it...at some point. 

Without a proper legal document, specifying the amount loaned, the period of
time that the loan was to be paid by instalments, (or paid off completely), 
and interest (if any), signed by both parties in front of a lawyer,
or a notary public to certify the document..good luck with that!


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## mind_business (Sep 24, 2011)

Soils4Peace said:


> When I lend money to a friend I write it off at the beginning. I don't count on being repaid.


Yeah, that's the way we do it too. Having said that, we have only been asked once from a family member to lend them a significant amount of money for a car. We told him no simply because he was trying to purchase brand new, rather than one that he could afford. I refuse to enable people.


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## Smurfette (Jul 31, 2011)

My mom has a rule. If a friend asks you to lend them money, don't lend anything but give them as a gift however much you are willing to give. It's nicer for them and you aren't left with a complicated mess.


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## the-royal-mail (Dec 11, 2009)

Not sure what can be done. If it ends up in court, do you have a signed agreement with your friend which stipulated repayment terms? If not, then as stated above you may not win your case.

People who hit up friends for money are generally very irresponsible. You do of course have to consider each circumstance but beyond that it's not a good idea. I'll pay the tip or buy them lunch of we're out together but beyond that not much. None of my friends would ever be comfortable borrowing money from friends either. I just don't see it happening. Even if they were desperate, they would still be really uncomfortable and would reduce their expenses etc long before asking friends for money.

That's why there are credit cards, lines of credit and the like.


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## Cal (Jun 17, 2009)

Any updates Fain?


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## hboy43 (May 10, 2009)

Hi:

I made this mistake too in my youth for about the same money adjusted for inflation over 28 years.

It is good to learn these lessons when young and the amount of money is small. I have never again lent anyone money.

hboy43


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## donald (Apr 18, 2011)

He is not your friend anymore,how can he be?He has used you and could care less.apply constant pressure on him,every week call him twice a week...keep stating you want your loan back nothing more or nothing less in your conversation.Step 2)Call his parents,gaurdian or who ever and tell them there son owes you money...apply same pressure on them.

If that fails to get through start leaving msg on his machine telling him you need his legal adress...who is his lawyer...ect...confuse him...keep him guessing.

Call his employer,if you can get him or her on the line,make it so he will learn you talked to them.

Dont give up....relentlessly pursue him...if your 23 and facebook is important expose him to a vast amount of people on the public wall....Try a few of these.


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## Fain (Oct 11, 2009)

I still have no money paid back and we set up multiple times to meet but he's skipped every meeting. . . It's a bad situation, I think i will go to his parents house and wait till he gets off work. I don't see many options


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## Fain (Oct 11, 2009)

donald said:


> He is not your friend anymore,how can he be?He has used you and could care less.apply constant pressure on him,every week call him twice a week...keep stating you want your loan back nothing more or nothing less in your conversation.Step 2)Call his parents,gaurdian or who ever and tell them there son owes you money...apply same pressure on them.
> 
> If that fails to get through start leaving msg on his machine telling him you need his legal adress...who is his lawyer...ect...confuse him...keep him guessing.
> 
> ...


Your idea is more and more appealing to me, I just considered him a good friend in the past, and this is a bit difficult for me


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## marina628 (Dec 14, 2010)

Fain
A little embarrassment will go a long way .Years ago somebody I thought was a friend tried to rip me off , I had to resort to going down to her level .She was messing around with her coworker and I left voice mail that she had 3 hours to meet me at the mall with my cash or I would be telling her husband.Well she could not get there fast enough lol.If she was starving I would let it go but she was living the good life on my cash.I would go to the parents and talk to them about the debt and see if they can help you secure a monthly payment arrangement.Let them know if he messes up you will take him to small claims court.


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## andrewf (Mar 1, 2010)

I think that suggestion is getting into criminal harassment territory. If you don't care about the relationship, hire a collections agency to do the harassment on your behalf, hopefully in a legal manner.


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## donald (Apr 18, 2011)

Andrew do you think said friend wants to get law enforcement into the mix?The friend knows he owes you money....that would actually give you a upper hand....tape a conversation with him on the line....but play "weak" and get him to draw the loan out into conversation.

There is alot of ways to play this...good luck....you just got to plan....


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## marina628 (Dec 14, 2010)

I assume he knows parents too , maybe the parents can help their kid out then OP can wipe his hands clean.


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## andrewf (Mar 1, 2010)

I don't think it is legal to surreptitiously record a conversation. Get legal advice before trying to do anything underhanded.


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## OptsyEagle (Nov 29, 2009)

Do you mind if I ask: Why you lent such a deadbeat so much money?


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## Fain (Oct 11, 2009)

OptsyEagle said:


> Do you mind if I ask: Why you lent such a deadbeat so much money?


I have my own business not full time just part-time and i went away to europe for awhile. He was supposed to manage it while i was gone. Long story short, that is how it came about. I feel like he will take on the loans i just have to surprise him in person


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## OptsyEagle (Nov 29, 2009)

Fain said:


> I have my own business not full time just part-time and i went away to europe for awhile. He was supposed to manage it while i was gone. Long story short, that is how it came about. I feel like he will take on the loans i just have to surprise him in person


I hope you explain things to your friend a little better then that explaination to us (completely incomprehensable).

The reason I ask is if we knew what the loan was for, why your friend could not come up with the money from other sources, why he knew you had it and why you ever thought he might pay it back, we could perhaps shed some light on the situation.

You say you think he will take on the loans if you surprise him. He didn't have the ability or motivation to take on a real loan when there was something in it for him, but all he will need is a surprise now and that shall change things. I seriously doubt it. I don't disagree that if you cage him into a corner he won't agree to some loan and payment terms. The question is, will he still agree once you let him go.

In any event, good luck. I hate deadbeats, but unfortuneately as we have seen, the world is full of them.


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## Fain (Oct 11, 2009)

Update, my friend has put the my CFA course on his credit card to help pay down the debt by $1,150, and the rest i've decided when he get's a job we will go to the brick and get some furniture/electronics to cover the rest. 

Stress is gone, Debt going down, friendship still there


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## Soils4Peace (Mar 14, 2010)

mind_business said:


> Yeah, that's the way we do it too. Having said that, we have only been asked once from a family member to lend them a significant amount of money for a car. We told him no simply because he was trying to purchase brand new, rather than one that he could afford. I refuse to enable people.


Update: I was just repaid in full after ten or so years, just last week out of the blue.


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## cityandcolor (Jan 24, 2012)

I feel like it depends on the situation in which you are loaning out money to a friend. 1. just how good of friends are you? 2. $ amount of how much you are lending. If it's under $100- what ever. If it's more than that, have them sign a piece of paper confirming that they will pay it back. Even IF you are best buddies for life. It's just smarter this way.


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## heyjude (May 16, 2009)

Fain said:


> Update, my friend has put the my CFA course on his credit card to help pay down the debt by $1,150, and the rest i've decided when he get's a job we will go to the brick and get some furniture/electronics to cover the rest.
> 
> Stress is gone, Debt going down, friendship still there


Hmmm. That's positive, but only if you need "stuff" and he pays for it. Will you own the furniture, or will he be able to claim that it is his? Get something in writing. 

I have learnt NOT to lend big sums of money to anyone.


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