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How to recover debt from a verbal agreement

18th June 2020

verbal agreements and debt recovery 


Good morning

“I only have a verbal agreement, and they are denying the debt, please help me.”
It is often the case between friends and family that money is loaned on a verbal agreement.
At the time both parties act in good faith but due to circumstances difficulties arise where a breakdown in relationship or financial difficulties results in a person denying the agreement. I have had clients in this position both with family and friends.
Whilst an aural agreement can be enforced, there may be difficulties in establishing the agreement to the satisfaction of the court. When you go to court you can never be sure of the outcome or how the case will proceed leading to legal costs, emotional costs and time costs in running your case. To establish the agreement there is a requirement for physical evidence. Physical evidence that I have used to assist my clients includes the following:
1. Bank records;
2. Messages using an electronic application such as Facebook, SMS, WeChat, Whatsapp;
3. Emails;
4. Telephone records; and 
5. Diary notes
Without such evidence it becomes is it just one person’s word against another and a battle to convince the court regarding your credibility over the other’s.
I always recommend a deed of agreement including interest and a final repayment date. A lender is always at liberty to forgive interest and extend the length of a loan. When money is loaned over a property I recommend a trust deed and unregistered mortgage safeguarded by a caveat. Fortunately, many of clients have followed my advice and have been able to recover their money especially in the case of marriage breakdown when arguments arise over whether a loan was a gift or not. 
I have successfully represented my clients both in the Family and civil courts to establish a verbal contract. I have also been able to settle many cases through a thorough forensic analysis to discover other collaborating evidence to bring the debtor to pay.
If either you or someone you know is thinking of lending to a close friend or relative or needs to recover money from a verbal agreement please contact me.

Kind Regards,

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