 Sorry, that oral agreement is enforceable
|  Dear
Debt Adviser,
In June of 2006, my then-boyfriend loaned me $25,000. We have a verbal agreement that I will pay him $500 a month, starting in March of 2007, 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 of action should I take? I have no problem paying the money back to original verbal agreement, but I do not agree to the terms he is trying to implement six months after the fact.
-- Shannon
 Dear
Shannon,
$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.
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 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.
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Elements of an enforceable oral agreement: |
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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.
I'll bet he will be checking with his. 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 to the poor sap 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.
Good luck!
The Debt Adviser, Steve Bucci, is the president
of Money Management International Financial Education Foundation
and the author of "Credit
Repair Kit for Dummies." Visit MMI
for additional debt advice or to ask a question of the Debt Adviser,
go to the "Ask the
Experts" page.
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