Q In June 2006, my then-boyfriend loaned me $25,000. We have a verbal agreement that I will pay him $500 a month, starting in March, at a percentage rate of 7.70 percent, for 60 months.
We have since broken up, and he has drawn up a promissory note for repayment, and included new items such as late fees, demand of loan repayment in entirety if I am late three times, filing for bankruptcy, etc. In other words, he is trying to get me to sign something that was never agreed upon.
What steps should I take? I have no problem paying the money back as originally agreed to verbally, but I do not agree to the terms he is trying to implement six months after the fact.
A $25,000 — now that's what I call an early Christmas present! I would also call it foolish on both your parts, and if you stepped back and took an unbiased look, you probably would, too.
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I often tell readers to match the term of the debt to the useful life of the item. Thirty years for a mortgage is OK, but paying the minimum on a credit card for seven years for a meal out is not OK. Obviously, the term of your relationship did not match the financing you chose. Here's the bottom line: He has to live with the original agreement, and you have to live with his whining for the next five years, three months. Sounds like a bad deal all around to me.
Be aware that if you decide not to repay the loan, your ex-boyfriend is not without options. Although you only have a verbal agreement between you, state and federal laws exist to enforce verbal contracts.
An oral agreement is considered legally enforceable if it meets certain conditions.
● It must contain essential contractual terms.
● The terms must be sufficiently precise to allow for enforcement.
● All essential terms must be identified and not left to future agreement.
From what you have described in your letter, it appears that all the necessary conditions are included in your agreement and, therefore, it constitutes a legally enforceable agreement.
You may want to check with your attorney to get definitive advice. Your attorney may be able to come up with a written agreement that will retain your rights and satisfy your ex so he doesn't call you every month.
I'd suggest you give in a little so he can at least save some pride and have the appearance of a loan based on something other than hormones.
Believe me, his buddies know about it already, and it would be a great Christmas present for him if you could give him a dignified way around his current situation.
I hope you and your ex are able to come to a written agreement, or if not, that you honor your verbal one.
Debt Adviser