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  1. #1
    Join Date
    Oct 2017
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    3

    Default Creating a Loan Agreement Where the Lender Will Pay Money to Third Parties

    My question involves court procedures for the state of: Florida

    This forum is very helpful!

    I am from Florida. I wish to pay tuition fee, car insurance, cell phone bills, and other bills for my adult child, John, at various times, because he is now in a financial trouble. I wish to make these payments, directly to John’s college, car insurance company, cell phone company, etc, from my personal bank account or by using my personal credit card (i.e., I will not give/pay any money directly to John). I want to make these payments over a period of several months (or a year time) whenever John informs me to pay (i.e., I will not pay these bills in a single lump sum to any of these companies or college but will be over a period of time).

    I want to execute a single loan agreement, prior to my first ever payment to any of these companies/college, in which I wish to mention how much money I will pay in total (directly to those companies/college, etc); by what date I will not make any more payments; by what date(s) John has to pay all that money back to me (John can pay me back in one lump sum or in installments as he wishes); and what is the interest rate for this loan.

    Is this kind of loan agreement with John is legally valid (OR do I need to execute a separate loan agreement with John for each of the transfers I make to those companies/college of John)?

  2. #2
    Join Date
    Nov 2013
    Posts
    7,056

    Default Re: Creating a Loan Agreement Where the Lender Will Pay Money to Third Parties

    The loan agreement would be legally enforceable in any manner you write it as long as it is clear, concise, and agreed to and signed by both you and your son. You would also want to execute a promissory note.

    But the reality is that if you have any anticipation of getting paid back any time soon, you should think twice because this kind of loan to your son is likely not going to get repaid. If John defaults will you sue him? And when he gets out of college and starts to earn his own way, will he have the money to make payments to you? Or will he need whatever money he makes just to survive?

  3. #3
    Join Date
    Mar 2013
    Posts
    18,340

    Default Re: Creating a Loan Agreement Where the Lender Will Pay Money to Third Parties

    You might as well treat all those expenses as gifts because

    Quote Quoting nindo
    View Post
    I will not give/pay any money directly to John).
    Speaks volumes about John's inability or unwillingness to pay any of it back no matter what kind of contract you have him sign.

    Frankly, I think you should let John sink or swim.

    Otherwise you just enable him to continue his financial irresponsibility knowing that Mom will always bail him out.

    Been there, done that, and speak from experience.

  4. #4
    Join Date
    Sep 2005
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    Behind a Desk
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    98,846

    Default Re: Creating a Loan Agreement Where the Lender Will Pay Money to Third Parties

    You know John better than us, but the fact that you're concerned that he'll squander the money you lend to him instead of using it to pay off of his debts is a red flag even to those of us who don't know him. You're trying to help John dig his way out of a financial hole of his own making, but many people in John's position won't respond to the help by ending their profligate ways. Instead they'll directly or indirectly show creditors that they're making payments on their debts in order to qualify for and obtain additional credit.

    One slightly different tack would be to loan money to John in small increments, with his signing promissory notes for the amount he takes, then decline to lend him any more money until he provides clear proof that he has used the money you lent him to pay the bills he has borrowed money to pay. If he cannot or will not prove that he has paid the bills, stop loaning him money. Another would be to loan him the money, let him do what he wants with it, but let him know that if he doesn't pay his bills off and does not repay the loan from you as promised, he'll never receive another money from you and will not receive an inheritance.

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