Family Situation / Advice Please

dfwben · #1 06-13-2006, 10:34 AM

Back in 1997 my uncle had asked for a loan from my parents for around 125k to pay off his building (supposedly). My parents were happy to give him the money to help him out cause they were sure that he would pay it back. Well he hasn't made a payment to them since 1998 and my mom is getting really really pissed off and my dad will not sue him because it is his brother. With total interest and everything it is up to 159k that he owes my parents.

My question is, what are some legal and professional ways of going about it to get the money back. The idiot uncle suggest that he has a life insurance policy and that we can have it when he dies which sounds like total bs and he will be leaving his kids and wife with nothing. Thanks ahead of time for the help.

esad · #2 06-13-2006, 10:37 AM

The money's gone. You'll never get it back. Your parents broke the most important rule: Never loan money to relatives.

dfwben · #3 06-13-2006, 10:39 AM

awesome, thanks.

kibble420 · #4 06-13-2006, 10:39 AM

[ QUOTE ]
The money's gone. You'll never get it back. Your parents broke the most important rule: Never loan money without a contract.

[/ QUOTE ]

djoyce003 · #5 06-13-2006, 10:50 AM

no contract I guess? Repo the building and evict his ass. Your uncle sounds like a real douchebag for not paying this off and telling your family to "wait till he dies."

Bluffoon · #6 06-13-2006, 11:02 AM

Sounds like you dad's got the right attitude. I never loan money I can't afford to lose. If it comes back great, if not, well enjoy the gift.

If your mom didn't agree about the loan to begin with then she has some issues with your dad. I suggest settling that debt with some diamond earring or maybe a cruise.

OrigamiSensei · #7 06-13-2006, 12:16 PM

I'm not sure if you are aware of this but if the loan is forgiven then it effectively becomes a gift. Since the amount of the gift is over $10K it is taxable income for the year in which the loan was forgiven. If your father wants to turn up the heat he can threaten to forgive the loan and tell your uncle that the IRS will be made aware of the gift. Given the choice between a hefty tax liability and making payments your uncle just might cave. On the other hand if your uncle is a real piece of work he might just decide that one smaller bulk payment to the IRS is a more attractive option. Of course if he's that crooked he may not want any attention from the IRS, either. Might be worth a try.

punkass · #8 06-13-2006, 12:33 PM

[ QUOTE ]
I'm not sure if you are aware of this but if the loan is forgiven then it effectively becomes a gift. Since the amount of the gift is over $10K it is taxable income for the year in which the loan was forgiven. If your father wants to turn up the heat he can threaten to forgive the loan and tell your uncle that the IRS will be made aware of the gift. Given the choice between a hefty tax liability and making payments your uncle just might cave. On the other hand if your uncle is a real piece of work he might just decide that one smaller bulk payment to the IRS is a more attractive option. Of course if he's that crooked he may not want any attention from the IRS, either. Might be worth a try.

[/ QUOTE ]

The recipient of the gift is not taxed. It is the giver. And even then, you have $1M (i think) to give away during your lifetime without being accessed the estate tax.

Obviously if there is no contract, you are SOL out of the money if he decides not to pay it back during his lifetime. That sucks, since that is a huge ass loan. Repayment plans should have been discussed prior to the loan given out.

Other than the family disowning him, you really have no options. I don't think you can save 125k worth of money by not sending him and his kids any Christmas presents.

dfwben · #9 06-13-2006, 12:56 PM

there is a contract on the loan. the only problem is with my dad not wanting to sue him to get the money. i was even thinking of offering to my parents for me to buy the building, threaten to evict him, or just sell it. the other option i was thinking was to have the bank buy the building and make him pay payments directly to the bank and just cut my parents a check. the only problem with that is that we don't know if he took out a 2nd loan on the building yet.

Empty_House · #10 06-13-2006, 01:45 PM

Have there been any screaming fights yet?