How to get money back I lent my sister?

Question

Five years ago I lent my sister 20,000 and she said the bank needs it down as a gift and now she won't pay it back. Is there anything I can do?

Answer 1

I am neither a lawyer not a financial advisor. This is neither legal nor financial advice.

If "she said the bank needs it down as a gift" is because the loan was used by her to help buy a house (together with a mortgage from the bank), then – from what I've seen here on PF&M – this could complicate things. When banks determine whether to lend, how much to lend, and at what rates, part of those calculations – as I understand it – are influenced by where the borrower's down-payment is coming from (savings, gift from others, a loan etc.).

If you can "prove" it was a loan, but she said it was a gift, the bank may have grounds for action of some kind against her, and possibly you, for misrepresenting the facts when she applied for a mortgage.

If you cannot prove it was a loan (and she can point to her mortgage documents to indicate it was given as a gift), you will probably have a hard time enforcing repayment.

In practical terms, you probably have to consider the money gone. If it happens, later, that sister is both willing and able to repay (some of) the money, then I think that must be seen as a bonus.

To do anything else, you will need to seek appropriate legal advice.