I can understand your frustration. You lent your sister and her husband money with the expectation of being repaid, and they're not doing their part in making the loan payments.
If you don't have a written loan agreement, then you have some obstacles to overcome in taking them to court. In general, 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.
If you do have a written agreement, the loan agreement should speak to the options available to you when loan payments are missed. The notice letter you sent them may have been required by the loan document. If it wasn't, it certainly tipped your hand and showed them how displeased you are about their nonpayment.
According to Nolo.com, your $2,500 loan is within the limits of actionable claims in all 50 states, allowing you to pursue your claim in small claims court. You should check the Office of the Attorney General in your state to see if there are specific rules or exclusions. Some states, for example, require that you file within a certain amount of time of the last loan payment.
Before you pursue legal remedies, I'd like to suggest you have a heart-to-heart with your sister about the loan and the loan payments. It's possible that no disrespect was intended and they just weren't able to make the scheduled loan payments. Try to determine if they are willing and able to make payments. Keep in mind that winning in court may still require you to take additional action to get paid.
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