Good morning,1. A friend gave me a loan a couple of years ago with the understanding of repaying as soon as possible. I was successfully making a living then as a freelancer.2. With the great financial crisis, all went tumbling down and we had to make an arrangement (including mediation, at his request, which I accepted) to pay by installments (which constituted almost half of my monthly living costs). I also had to neglect all other debts with financial institutions that were pressing me to repay my debts with them, not to mention the pressure of daily living costs… all just to keep paying this particular individual). 3. With the friend being upset for the great delay I caved in and suggested to compensate him with interest, in the form of an agreed sum that will be paid at the end of the base loan being re-payed. He was threatening me to sue so I tried to be fair to him (and he accepted although in my book, “friends” are not supposed to ask for interest)4. Being in financial hardship (Centrelink benefits for a long time afterwards) and the debt being quite a large amount (5000) it took quite a few years to repay the whole amount in installments and just finalised last week.5. In the meantime, all other financial institutions that I had postponed all these years (including ATO) have been pressing me with repayments, and I managed to juggle with arrangements and/or breaking arrangements in order to finalise this debt with this guy. Out of all the debt collectors, he was the only one who threatened consistently with taking me to court, and I only avoided this situation by accepting to go into mediation, pay regularly and show proof of Centrelink payments (just to show good will and stop him from continuously harassing me with emails).6. We are therefore finding ourselves now in a new situation: the interest. I have just finalised the payment of the debt IN FULL and wrote to him that he should expect me to get back to him by the end of Sept to discuss arrangements for the interest, due to my financial hardship and the fact that I do have to address other important debts that I put aside to make his regular payments. I can’t afford to be taken to court by banks or ATO and I do wish to finalise all debs on all fronts and carry on with my life. 7. He flipped out saying that in mediation we arranged to keep paying, to keep showing him my private documents (Centrelink or other income) or else… Mediation papers were never legalised and never stated that I should pay the interest in instalments anyway… it was open ended from what I recall, we agreed that it would be paid as soon as possible after the base loan was finalised. 8. I have politely declined his immediate demands to continue at his will, and explained that he should expect me to discuss and resume payments in 3 month’s time, when I might be in a better position to take care of this matter. Also, that the interest is his profit and he can be flexible in waiting, especially that I was the one suggesting to compensate for the lengthy repayments of the debt (waiting which I understand he is sick of, but this is the situation we are in). I am still in a fragile position financially and with all good will, I can’t afford to resolve this at his “command”. Nor do I wish to expose my private affairs with him anymore (financial Situation, documents etc), considering that I have actually paid him what he was owed in the first place. My question: does he have a case had he decided to take me to court? Can he actually take me to court? And also, is he/was he entitled to me showing candidly my private affairs…. Am I protected by Privacy Laws to not share my private life, sensitive documents, address etc (I tried to keep the communications lines open but I definitely refused to give him the new physical address, to protect myself and the others living under the same roof who didn’t agree to give away their private address to an angry and potentially out of control person).Many thanks and looking forward to your feedback.Kinds regards.Jane
What documents did you and this friend of your's ever sign?Did you ever put it in writing that you would be paying him interest, or was this only verbal?
The only agreements in writing were: -our initial EMAIL with an informal email agreement (not legalised in any form) that he loaned me the amount of 5000 (an understanding just between the both of us). At that point in time, interest amount was NOT under discussion (so NO mention at all)-emails exchanged INFORMALLY between us during the following years (with no signature or formal legal authentification); the emails were about an agreed interest of 2000 to be paid at the end of the loan repayment (with no mention as to the conditions of the repayment)-Mediation session that resulted in us signing an agreement on what was said in mediation (not legalised, just a HAND WRITTEN paper with NOTES from mediators that we signed at the end). We both agreed on me repaying in weekly installments and also that I would take care of the interest in good faith, as soon as possible as well. No other additional specifications re interest but just this mention.
Just an additional note: I am not refusing to honor this last bit of the agreement, I am just trying to organise my finances to be in a position to make this last payment. My understading is that the interest was to be made at my earliest convenience after the full repayment of the debt but he seems to be inflexible. If I could afford it, I would pay, but I am still in financial hardship and this would plunge me in deeper trouble that I am with other financial institutions.
Unfortunately if you agreed to pay him $2,000 interest in emails, that is legally binding. At this stage, however, as there is no interest accruing on the $2,000, you are better off paying other creditors before continuing to pay him.
Thank you for that, Alex, neverthless your answer didn't answer very clearly my initial question: in your expert opinion, whether the other party has a solid case to go to court and sue me? If I have this piece of information, I might have a bit of negotiating leverage (that he is wasting his time and he'd better arm himself with a bit of patience to get the interest instead of going through the efforts and expense to file a case). Looking forward to your feedback. Thanks.
in your expert opinion, whether the other party has a solid case to go to court and sue me? The answer is yes. However, as you are on Centrelink payments, the Court would likely allow you to pay a minimum every week (for instance $10).
I did my law degree at the University of Queensland
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