How to find out what I owe former friend.

[Clep]

I borrowed money from a friend several years ago. She is no longer my friend and hasn't been for about eight months now. She took out a line of credit to lend me the money. I have paid her back consistently and I just make the line of credit payments. I have never missed a payment even since we have no longer been friends.

 

I would like to get it paid off and be done with her, but I don't know how much is left owing. I have asked repeatedly for a statement of account for the last six months, which she said she would provide, but doesn't get it to me.

 

I left the friendship due to the fact that I found out she was compulsively lying to me. I no longer trust her hence the statement of account being in order now I think.

 

When I ask her about this she won't reply to my emails, won't respond to my texts or answer the phone. She moved she told me but hasn't told me where she lives so I can't even go to her house to deal with the issue.

 

She sent me a balance owing through email many months ago, but I let her know I need the statement of account, and that I would be happy to pay for that. She could have just taken money out on it and I would never know the difference.

 

A month and a half ago I sent her an email letting her know I will not continue to pay this until I have a statement of account. I gave her the date of July 1st to get it which was a long time away. I suggested various ways of her getting it to me and still have heard nothing. I texted her last night and reminded her about the email. I still hear nothing.

 

I can't just keep paying a debt indefinitely without knowing the balance, interest and such. I have told her it shouldn't be this hard. She gives me the statement, and I pay the rest of it.

 

I am wondering if she is looking to sue me for not paying it even though I want to. The bank won't give me the info as the loan is not in my name.

 

What would you do? Any ideas of how to proceed from here?

[D-Lish]

Everything you have done has been in good faith- but you need that statement in order to balance your own budget and know how to proceed.

 

Keep track of all your e-mails and other correspondence so you have a record that you've made repeated attempts to settle this and she hasn't been cooperative.

 

I am assuming that you know how much she lent you and that you want to know what it costs with the interest?

 

Maybe she took out a larger sum of money on credit and used some for herself, and lent some to you?

 

How much do you owe her without interest? How much have you paid toward it so far? If she loaned you say $2000- have you paid that off yet?

 

You should be able to figure out from your bank statements how much you've paid her so far. Pay her the amount she actually lent you and then stop payment. If she wants to squabble about interest after you've paid her back the straight loan, then she will be forced to give you a statement.

[Clep]

Everything you have done has been in good faith- but you need that statement in order to balance your own budget and know how to proceed.

 

Keep track of all your e-mails and other correspondence so you have a record that you've made repeated attempts to settle this and she hasn't been cooperative.

 

I am assuming that you know how much she lent you and that you want to know what it costs with the interest?

 

Maybe she took out a larger sum of money on credit and used some for herself, and lent some to you?

 

How much do you owe her without interest? How much have you paid toward it so far? If she loaned you say $2000- have you paid that off yet?

 

You should be able to figure out from your bank statements how much you've paid her so far. Pay her the amount she actually lent you and then stop payment. If she wants to squabble about interest after you've paid her back the straight loan, then she will be forced to give you a statement.

 

I of course know how much she lent me. I have been paying it off for about three years now as it was $7500 originally. I don't have a clue of the interest and she won't tell me.

 

I have to get my bank to send me the records as I have transferred the money from my account directly to the line of credit as we bank at the same bank.

 

Because it has been three years and the interest rate has fluctuated in that time it is impossible for me to calculate how much is remaining.

 

I do want to know what is remaining so I can get it done. It can't be much at all if any at this point, so I don't want to keep paying on something I don't owe.

 

I do have all the correspondence and will provide that to the courts if required. I am wondering because I ended the friendship if she is looking for a way to take me to court to be vengeful.

 

It is just frustrating. I have never seen someone so uncooperative when they are the ones that are owed the money. Geesh.

 

I am hopeful that if she did try to take me to court the judge would see how uncooperative she is being and tell her to submit the darn statement of account.

[Trimmer]

Get the transfer information history from your bank first; one way or another, you'll need all that tabulated in one place. This is something you have complete control over, without having to rely on her.

 

Now yes, the interest rate she owed on her loan has fluctuated, and without that you can't figure it all out exactly yourself. In lieu of that, and to attempt to finish making payments in good faith (which you are showing a lot of...) I would make an estimate of the interest rate, and just assume you are paying her back with fixed interest. With that assumption, you can look at how each of your payments have broken down (principal vs. interest) and therefore, how much of the principal you've paid. This will tell you how much principal you still owe, and you can decide whether to do that in a lump sum or keep paying installments with interest.

 

You could do an interest rate estimate for each year, or just pick a value that averages out about right.

 

Once you've done this, put it all in a nice spreadsheet, showing each payment, and the parts that are principal and interest (based on your estimate) and sum it all up. Then write her a nice cover letter explaining how, since she has not provided a statement of account after multiple requests, you are paying the remainder based on your best good-faith estimate. Make copies, send it registered mail, etc... Maybe some of the attorney types here can suggest the best way to deliver it in a documented fashion so you can pull it out as evidence of payment, and of your good-faith efforts to bring it all to a close.

 

She could always come back and correct you on your interest calculation, but it should be abundantly clear - and you should be able to show, if things get to a "small claims" type situation - that you did nothing negligent or malicious in repayment. Quite the opposite.

 

Do you have the math/spreadsheet skills to pull off something like that?

[D-Lish]

Just go to your bank, and ask for a statement on how much you've paid. So it's 7500, how much have you paid per month to her in the past three years???

[Trimmer]

Just go to your bank, and ask for a statement on how much you've paid. So it's 7500, how much have you paid per month to her in the past three years???

To really work it out in good faith, you'd need to figure the interest in there as well, but that's where I suggest just use an estimate in the absence of any cooperation from her, and you can still figure out a "best guess" pretty easily.

 

You say her interest rate has varied - have your payments been the same every month, or have they varied with the interest rate, or what?

[Ronni_W]

I have been paying it off for about three years now as it was $7500 originally.

I used the amortization schedule template in Excel. To give you a very rough idea of what you may still be owing:

Assuming constant interest rate of 8%, it would take 36 monthly payments (since you've been paying for 3 years) of $235.02 to pay off a $7,500 loan. Total interest cost of $960.82.

At 10% interest: $242 x 36 payments; total interest of $1,212.14.

At 5% interest: $224.78 x 36 payments; total interest $592.14.

 

What you could do is ask the bank for a schedule of their interest rates for, say January 2008, 2009 and 2010, and just average it out. Then use the Excel template to figure out your total interest cost, deduct your total payments to date, pay whatever is the balance owing, and send/email her a copy of the amort. schedule (+ the bank's rates.)

 

She won't get very far trying to sue you if you've kept up the payments, and have records of you making attempts to find out how much you still owe her.

[SpanksTheMonkey]

I borrowed money from a friend several years ago. She is no longer my friend and hasn't been for about eight months now. She took out a line of credit to lend me the money. I have paid her back consistently and I just make the line of credit payments. I have never missed a payment even since we have no longer been friends.

 

I would like to get it paid off and be done with her, but I don't know how much is left owing. I have asked repeatedly for a statement of account for the last six months, which she said she would provide, but doesn't get it to me.

 

I left the friendship due to the fact that I found out she was compulsively lying to me. I no longer trust her hence the statement of account being in order now I think.

 

When I ask her about this she won't reply to my emails, won't respond to my texts or answer the phone. She moved she told me but hasn't told me where she lives so I can't even go to her house to deal with the issue.

 

She sent me a balance owing through email many months ago, but I let her know I need the statement of account, and that I would be happy to pay for that. She could have just taken money out on it and I would never know the difference.

 

A month and a half ago I sent her an email letting her know I will not continue to pay this until I have a statement of account. I gave her the date of July 1st to get it which was a long time away. I suggested various ways of her getting it to me and still have heard nothing. I texted her last night and reminded her about the email. I still hear nothing.

 

I can't just keep paying a debt indefinitely without knowing the balance, interest and such. I have told her it shouldn't be this hard. She gives me the statement, and I pay the rest of it.

 

I am wondering if she is looking to sue me for not paying it even though I want to. The bank won't give me the info as the loan is not in my name.

 

What would you do? Any ideas of how to proceed from here?

 

Honestly I would let to go to court if it comes to that just make sure you have kept all your records of payment and many emails and so on trying to contact her?

 

You will need those to prove your honesty seeing as you broke off the friendship due to her lieing its prob not a good idea to take anything she says at face value.

 

For all you know she could be lieing again or even using the credit line herself and having you pay for it at this point who knows. Since shes obliviously not willing to show you the actual bank papers ide say somethings fishy in bangkok let the courts deal with it...

[Trimmer]

I used the amortization schedule template in Excel. To give you a very rough idea of what you may still be owing:

Assuming constant interest rate of 8%, it would take 36 monthly payments (since you've been paying for 3 years) of $235.02 to pay off a $7,500 loan. Total interest cost of $960.82.

At 10% interest: $242 x 36 payments; total interest of $1,212.14.

At 5% interest: $224.78 x 36 payments; total interest $592.14.

 

What you could do is ask the bank for a schedule of their interest rates for, say January 2008, 2009 and 2010, and just average it out. Then use the Excel template to figure out your total interest cost, deduct your total payments to date, pay whatever is the balance owing, and send/email her a copy of the amort. schedule (+ the bank's rates.)

 

She won't get very far trying to sue you if you've kept up the payments, and have records of you making attempts to find out how much you still owe her.

 

Agreed...

 

So how much have you been paying each month?

 

Given that you haven't been keeping very close track of the situation, I just had the thought: wouldn't it be something if you had actually overpaid, and she didn't tell you, and technically she owes you money? That would certainly flip this whole thing on its head, wouldn't it?

 

Suddenly, her lack of cooperation would make perfect sense.

Edited July 30, 2010 by Trimmer

[SpanksTheMonkey]

Agreed...

 

So how much have you been paying each month?

 

Given that you haven't been keeping very close track of the situation, I just had the thought: wouldn't it be something if you had actually overpaid, and she didn't tell you, and technically she owes you money? That would certainly flip this whole thing on its head, wouldn't it?

 

Thats the feeling I get from how shes hiding the bank statements op needs to bring a 3rd party into this asap IMO so she doesn't get fleeced big time.

[Clep]

Thanks for all of your replies. I have been paying $250.00 per month. She tells me the interest is $60.00 per month and the rest is principal.

 

I have worked it out that I am owing nothing more at this point. She did send me a sheet via email that she got from online banking that only shows the balance. It was $3600.00 and I am not seeing how that is possible.

 

Personally I think she has used money from it and is not being honest about it hence the unwillingness to produce the statement of account or to even speak to me about it.

 

I just want to have my bases covered should she try to sue me or something. I can't see a judge saying though that I have been negligent. Out of the three years one payment was a day late and all others have been on time and I have never missed one. I am hopeful any judge would see that I have followed through on what I have said I would do.

 

I am gone for a week after tonight but will obtain a record of payments from my bank when I get back.

 

Thanks for the great advice everyone.

[Trimmer]

OK, we need a lesson in how loans work here. You will virtually NEVER, in the real world of lending, run across a loan that always has the same interest payment in dollars every month. The interest you pay is a percentage of the remaining principal, not of the original loan amount.

 

What this means, is that since each payment pays off a little bit of that original principal, then the "principal remaining" (the amount you "still owe") gets smaller and smaller each month - the whole point of paying it off, right? Therefore, in subsequent payments, the amount which is calculated as interest will also get smaller and smaller (you owe less as time goes one, so you pay less monthly interest.) Therefore in later payments, more of your payment is applied to the principal, and it "goes faster" as you get near the end.

 

Given your "$60 is interest" comment, I'm going to use that as a jumping off point, and ask, "OK, what if that was the monthly interest at the very beginning of the loan?" i.e. on the full $7500. If that were true, then 60/7500 = .008 montly rate, and to make that an annual rate, we'll multiply by 12 to get .096, or a 9.6% annual interest rate. That actually sounds like that's in a reasonable range for an unsecured loan. (To sticklers: I'm assuming simple interest, calculated monthly.)

 

But again, remember: as you pay down the principal, you'll have less interest to pay each month, so the part of your steady $250 that goes to the principal will get bigger as time goes on. I did a rough spreadsheet, rounding the interest up to 10%, and here's what it looks like:

 

            10%                 Principal
  Payment interest  Principal   Remaining
                                $7,500.00
1   $250    $62.50   $187.50     $7,312.50
2   $250    $60.94   $189.06     $7,123.44
3   $250    $59.36   $190.64     $6,932.80
4   $250    $57.77   $192.23     $6,740.57
5   $250    $56.17   $193.83     $6,546.74
6   $250    $54.56   $195.44     $6,351.30
7   $250    $52.93   $197.07     $6,154.23
8   $250    $51.29   $198.71     $5,955.51
9   $250    $49.63   $200.37     $5,755.14
10  $250    $47.96   $202.04     $5,553.10
11  $250    $46.28   $203.72     $5,349.38
12  $250    $44.58   $205.42     $5,143.96
13  $250    $42.87   $207.13     $4,936.82
14  $250    $41.14   $208.86     $4,727.96
15  $250    $39.40   $210.60     $4,517.36
16  $250    $37.64   $212.36     $4,305.01
17  $250    $35.88   $214.12     $4,090.88
18  $250    $34.09   $215.91     $3,874.97
19  $250    $32.29   $217.71     $3,657.26
20  $250    $30.48   $219.52     $3,437.74
21  $250    $28.65   $221.35     $3,216.39
22  $250    $26.80   $223.20     $2,993.19
23  $250    $24.94   $225.06     $2,768.14
24  $250    $23.07   $226.93     $2,541.20
25  $250    $21.18   $228.82     $2,312.38
26  $250    $19.27   $230.73     $2,081.65
27  $250    $17.35   $232.65     $1,849.00
28  $250    $15.41   $234.59     $1,614.41
29  $250    $13.45   $236.55     $1,377.86
30  $250    $11.48   $238.52     $1,139.34
31  $250    $9.49    $240.51     $898.84
32  $250    $7.49    $242.51     $656.33
33  $250    $5.47    $244.53     $411.80
34  $250    $3.43    $246.57     $165.23
35  $250    $1.38    $248.62     ($83.40)
36   $250   ($0.69)  $250.69     ($334.09)

 

See, in your first payment, you're paying 10% interest for one month on the full $7500, so that payment works out to $62.50. (Remember to divide the 10% annual interest rate by 12 to get the monthly rate.) But by payment #21, you've already paid off over half of the principal (see the "principal remaining" from the line above is $3437?) so your interest payment has dropped as well (to $28.65).

 

At a steady 10% interest rate, If you make a 35th payment of a full $250, then you've overpaid by $83.

 

I suppose that it is possible to make a loan agreement between two people that says "I will pay a steady $60 interest every month until the principal is paid off" but aside from being crazy, that's not how it works anywhere in the real world of lending - not with cars, homes, unsecured loans, credit cards, etc... In "real" lending, the interest you pay each month is calculated on the remaining principal you owe at that time, and therefore gets smaller as you pay down the principal.

 

So, I did a little dinking around with my spreadsheet... If it's been a full 3 years (i.e. 36 payments) that you've been paying $250 a month, then I calculate that you would have JUST paid off all the principal if the annual interest rate had been right around a steady 12.25%. If it had been a steady 10%, as shown in the example above, then after 36 payments you would have overpaid about $334, which includes a little bit of interest ($0.69) she owes you on the overpayment principal you "loaned her" by paying off too much...

[Trimmer]

Follow up... If you thought that every payment had $60 in interest, then you must have thought you were paying $190 in principal. Taking this further - based on your comment that you've worked out that you don't owe any more principal at this point - and dividing the original 7500 by the 190 you thought you were paying, this leads me to think you have paid at least 39 or 40 payments. If that's the case, then at any reasonable interest rate, you've WAY overpaid your obligation to her, and if she still shows $3600 remaining as "owed" on her account, then she's been borrowing more money.

 

Just as an experiment, I expanded my spreadsheet to 40 payments, and looked at the interest rate it would take to get you to 40 payments, yet still owing $3600 of the original $7500 principal: it would have to be around a 31% annual rate!

 

On the other hand, if it really is a more realistic 10% rate, then after 40 payments, you have overpaid something like $1360, counting some interest against her for the "loan" you gave her in those last months...

 

Clearly this all hinges on what the interest rate was, but I think, based on that "monthly interest payment of $60", it's not unreasonable to guess it out at about 10%.

 

It may well turn out that you have a cause of action against her here.

Edited July 30, 2010 by Trimmer

[Clep]

Follow up... If you thought that every payment had $60 in interest, then you must have thought you were paying $190 in principal. Taking this further - based on your comment that you've worked out that you don't owe any more principal at this point - and dividing the original 7500 by the 190 you thought you were paying, this leads me to think you have paid at least 39 or 40 payments. If that's the case, then at any reasonable interest rate, you've WAY overpaid your obligation to her, and if she still shows $3600 remaining as "owed" on her account, then she's been borrowing more money.

 

Just as an experiment, I expanded my spreadsheet to 40 payments, and looked at the interest rate it would take to get you to 40 payments, yet still owing $3600 of the original $7500 principal: it would have to be around a 31% annual rate!

 

On the other hand, if it really is a more realistic 10% rate, then after 40 payments, you have overpaid something like $1360, counting some interest against her for the "loan" you gave her in those last months...

 

Clearly this all hinges on what the interest rate was, but I think, based on that "monthly interest payment of $60", it's not unreasonable to guess it out at about 10%.

 

It may well turn out that you have a cause of action against her here.

 

Those are my thoughts exactly to both of your posts. I figure as well if the original amount of interest is $60.00 the loan rate of 10% is my calculation and the interest declines each time. It was not a high interest loan as at the time she had good credit and it was a line of credit. She does not have good credit now she told me about a year ago.

 

I was really tired this morning though and wasn't thinking very clearly. Sorry I haven't had much sleep lately. I have paid $200 per month. I am not worried about a cause of action against her. I just want her to send me a statement of account so I can pay of what I owe her in full, or know I no longer owe her. It would be much easier than going through all of these calculations.

 

It has been three years. I think she doesn't think I know about the world of credit. At any rate, I have been waiting for the statement of account and am not willing to make another payment until I receive it at this point. I have to work out the interest and payments according to $200.00 per month. It is really not making me happy that she is dealing with this so poorly.

[Trimmer]

At 10% annual interest, 45 payments of $200 each month will bring you down to a remaining principal of about $30. See your PM for the payment schedule..

[Tayla]

As a person who has worked in financials and contracting I am curious why no one has mentioned to the poster to get the original agreement. THis is the binding contract in which he signed for payments. In contactual law certain things must be spelled out. Term , APR , Defaults and Methods of payments. I am sincerely concerned that a person is paying based off of "good faith". No judge will take light to this style. Even a promissory note carries certain legal terms. If the guy is piggybacking off the loan, guess what...UNless she wrote an addendum to add him or to make him also accountable under the original line of credit..he doesnt necessarily owe her a dime (legally). ALthough based on your state of residency I would suggest at the very least a consult with a paralegal for advisal on this matter. Bottom line- what does the legal doc you signed state.?

 

I would suggest before jumping into the unknown, start with the original documents. IF you don't have any, then its hard to prove the original amount or amounts due..So why are you paying for something you have no knowledge of legally agreeing too?..How have you been writing off the interest paid under tax law? Sorry but I am a wee bit confused on this transaction in general....

[Trimmer]

As a person who has worked in financials and contracting I am curious why no one has mentioned to the poster to get the original agreement. THis is the binding contract in which he signed for payments. In contactual law certain things must be spelled out. Term , APR , Defaults and Methods of payments. I am sincerely concerned that a person is paying based off of "good faith". No judge will take light to this style. Even a promissory note carries certain legal terms.

Your points are all well taken and quite on target. I've been assuming (reading between the lines, admittedly) that this was a handshake between friends, and that they didn't exactly adhere to the practice of writing binding agreements with default clauses, etc... Therefore, we're back to the OP making a best-faith effort to complete her obligations in a mighty honorable way, in the absence of written guidance from the realm of contractual law, or even cooperation from the lender for that matter.

 

On the other hand, if I'm wrong, and there was any kind of explicit agreement, then yes, that should be the foundation that guides current considerations.

 

If the guy is piggybacking off the loan, guess what...UNless she wrote an addendum to add him or to make him also accountable under the original line of credit..he doesnt necessarily owe her a dime (legally).

Based on the information here, yes, it's pretty clear that the OP doesn't owe a dime directly to the lender of the line of credit, but whether it's "legal" or not, as a human being who made a personal commitment, she "owes" payment of the loan back to the lender.

 

I would suggest before jumping into the unknown, start with the original documents. IF you don't have any, then its hard to prove the original amount or amounts due..So why are you paying for something you have no knowledge of legally agreeing too?

Because she has clear knowledge and memory of personally agreeing to it, and whether or not it was wise to do that without legally agreeing to it, she feels honor-bound (as I would) to fulfill that personal commitment.

 

(Incidentally, I think both the OP and the lender are female.)

Edited July 31, 2010 by Trimmer

[Tayla]

Trimmer, your points are well taken from a moral stand point and one that many could live by. The legal reality- get it in writing.

The Laws and evidence of the contract are what determines this matter.

Morals rarely enter into contract and collections.

 

True that judgments and collections rarely turn out favorable for the plaintiff if suit is won.

[Trimmer]

Trimmer, your points are well taken from a moral stand point and one that many could live by. The legal reality- get it in writing.

The Laws and evidence of the contract are what determines this matter.

Morals rarely enter into contract and collections.

Oh yes, we're definitely on the same page here, I completely agree.

 

I think the thing that makes "lending to friends" so dangerous isn't that "lending to friends" is inherently dangerous, but that friends assume that they can just "wing it" and not need to dot the i's and cross the t's. To the contrary, it's in this situation that it's especially important to do what you say: lay it out clearly in writing. Then, you have some hope that the cold, unambiguous language of the contract will actually insulate your friendship from the loan - that if the agreement is sufficiently clear and literal, there will be no need for either party to resort to persuasion, feelings, pressure, and you won't need to waste the "friendship capital" working out disagreements.

 

However, all that is 20/20 hindsight in this case - this poster is already down the rabbit hole, so all she can do now is do her best to meet her obligations honorably and get it all finished.

[Clep]

Trimmer, your points are well taken from a moral stand point and one that many could live by. The legal reality- get it in writing.

The Laws and evidence of the contract are what determines this matter.

Morals rarely enter into contract and collections.

 

True that judgments and collections rarely turn out favorable for the plaintiff if suit is won.

 

I understand what you are saying here. I do also think that if one lives by high morals, evidence and court are not a requirement.