Expert: Timmy Chou - 12/21/2008

Question
Hello!  I hope you can help me!  In May of 2008 I loaned just over $11,000 to my boyfriend at the time to pay off his credit card debt.  We had a verbal agreement to pay me back as much as he could monthly.  It's now December of 2008 and I have only received one payment of $250.  He won't return emails or phone calls regarding the subject.  Now I have medical bills that I can't pay.  I know that Illinois small claims cap is $10,000, so I'd be willing to lower the debt to resolve this easily and quickly, but I'm not sure whether small claims is the best way to go.  How do I get out of the hole I dug myself?

Answer
Thank you for your question!

Mediators act as neutral third parties to disputes and never "get involved" in judging the merits of conflict, but merely use special techniques to help the parties decide how to negotiate their own settlement.

I am not a lawyer and cannot mediate this with you alone, or give you legal advice, but I can respond to your question from my business consulting experience.

Note that this issue may have legal ramifications and you may wish to
consult an attorney.

Well, IMO here is the good news -- you did have an agreement for repayment and a verbal agreement is enforceable.  

The bad news though is that there were no specific terms.  If you go to court he may argue that he is holding up his end of the bargain since he is "paying as much as he can", and there is no specific requirement beyond that.  If he agreed to make MONTHLY payments he may have violated his agreement on this point.  

You should know that the difficulty with your case may not be in the courts.  You may well be able to get a judgment in small claims court for the statutory limit ($10k) against your boyfriend.  However, it will be up to you AFTER the judgment to enforce it.  You will have to garnish wages, seize bank account assets, or have a constable show up and seize physical assets like cars, stereos, TVs, etc.  These processes will cost you some time and money, and you have to determine if there is something to get.  Often there is not, and there is a cost to pissing him off in a way that may make it harder for you down the line.  

These are the hard decisions you must make in determining if you are better off using a positive approach or a negative approach.  If he has a job and career and would not want to have wages garnished or assets seized you have some leverage.  If not, you may get a judgment but so what if it can't be enforced.

Do what you can to leverage him with pressure, friends, associates, work colleagues, etc. before you resort to legal action.  

These are some ideas.  Feel free to follow up with additional questions.

For your information, the pros and cons of the types of dispute resolution methods follows.

GOOD LUCK!

Arbitration, Mediation, and Litigation

Arbitration: the referral of a dispute to one or more impartial persons for final and binding determination outside of the judicial system

Benefits of Arbitration:

    Confidential, no public record
    Limited exchange of documentation, information
    Quick, don't have to wait for a court date
    Arbitrators have expertise in the subject matter and are trained in conflict resolution
    Cheaper than litigation
    Preserves business relationships

Negatives of Arbitration

    It's a compromise, no 100 winner
    Complex arbitration can be costly
    If not satisfied, may litigate the arbitration procedure
    Poor results with an unskilled arbitrator
    Both parties must agree to cooperate in the process

Mediation: the process by which parties submit their dispute to a neutral third party (the mediator) who works with the parties to reach a settlement of their dispute.

Benefits of Mediation:

    Neutral mediator can objectively suggest alternatives not considered before
    Parties are directly engaged in negotiating the settlement
    Can be quicker than litigation
    Less costly than litigation
    Preserves business relationships
    85% of American Arbitration Association cases mediated find successful solutions

Negatives of Mediation

    may not reach a binding decision
    unskilled mediator

Litigation: using the judicial system to resolve disputes

Benefits of litigation:

    a clear winner and loser
    uses a prescribed set of procedures
    more predictable outcomes
    is final

Negatives of Litigation:

    waiting for court dates can do more harm
    usually more expensive than mediation and arbitration
    part of the public record