Dear Debt Adviser: My daughter borrowed $500 from me many years ago and was supposed to pay me back when she got her tax refund check. Long story short, she never paid me back. Recently she got in trouble, and she borrowed another $293. This brought the amount she owed me to $793. She said she had a new job and would get a check two days from then. She said she’d have enough money to pay me everything she owed me at one time. Instead, she sent me a check for $100 with a note saying she would pay me more when she got another check. She sent me two more payments of $100 each, totaling $300, and then she stopped paying. She put a note in each payment envelope I received with the balance owed — then she quit paying. Can I sue her for the $493 balance she still owes? Thank you. — James
Dear James: It sounds to me as though you are $300 ahead! She must be a charming daughter; otherwise, you wouldn’t have lent her the second sum without her paying you back for the first loan. So not only are you ahead, but you have a charming daughter. What more can you want? Well, if it’s $493, read on.
The short answer to your question is yes, I believe you have enough evidence from the notes included in the payments your daughter made on the money she borrowed to sue her in court and probably win. My experience with the law, however, is that it rarely offers satisfactory solutions. And it almost never satisfies family disputes. So, the question I have for you is: Do you really want to sue her?
In most states it is relatively inexpensive to file a case in a small claims court. In my native Rhode Island, the filing fee is $30 plus the cost of sending the court papers certified mail, or if that is not an option, by constable or sheriff. States set the maximum amount allowed for suit in small claims court cases -- they range from $2,500 in Rhode Island to $25,000 in Tennessee.
What can be a rather significant problem with small claims court victories is collecting from the person you have sued. If the person sued does not voluntarily pay, you will be issued a judgment from the court in the amount owed. You will then be armed with a court order and documents that can be used to collect. But that still leaves you without the $493.
You must carry out the work of collecting the debt. The court will not do that for you. Unless you are knowledgeable about collection practices, you will likely have to pay an attorney or other professional to collect the debt owed you.The costs to collect may exceed the amount of your judgment. You could try on your own, but if she didn’t pay you when she liked you, I don’t believe a court order will help matters.
Many fathers have made the mistake of loaning money to children with the expectation that it would be repaid. This is a hazard and a joy of parenting. My advice for you is to consider the loan a gift. Your relationship with her is more valuable than $493.
Steve Bucci, author of “Credit Management Kit for Dummies,” works with InCharge Debt Solutions, a nonprofit organization in Orlando, Fla. E-mail him at email@example.com.