Earlier this year I lent a close friend about $5,000 when they were faced with an extreme situation. My friend immediately paid back $3,000 of it and is determined to pay back the rest. I made it clear at the time that it was fine to take however long to repay it, for which they were grateful. I offered to make the remaining amount a gift, but they said no, they would repay the debt.
Unfortunately, their financial situation has not lent itself to debt repayment due to circumstances beyond their control. I don’t need to be repaid. I don’t want to worry about it and don’t want my friend to have to worry about it going forward.
Is there any way I can forgive the debt in a way that will make it stick for legal purposes, so they have protection too and know I won’t just come back later and ask them to pay up if we were to have a falling out or something? We never drafted any legal agreement when I lent them the money. I’ve found some templates online but they seem mostly aimed at when a business wants to forgive a debt.
Location: Illinois (my friend is in a different state, however)
Comments
If there were was no legal contract involved then it would already be somewhat hard to prove it was not a gift in the first place. I am not a lawyer but your repeated attempts at making it clear that you do not want any additional payment should be enough, if you want to be absolutely clear than you can probably just draft a simple letter saying that you consider the debt repaid and just pay a small sum to have it notarized (maybe have a few copies) and then just give them the letter, that should be enough protection for them.