Confusing Family Loan Payback

[colejacharris]

I specifically joined this site to ask this exact question.
So years before my husband John and I met, he wanted to buy a used car. At that present time his sister Denise was married to a well established realtor named Tony (Im using names so it doesn't get confusing with noun usage throughout the story). John knew that Tony had the extra $7000 in cash because of his successful career but felt awkward asking, so John got his sister to ask Tony for him. It wasn't a big deal, Tony loaned John the cash for the car and moved on. Though there was no formal agreement, paying the money back was discussed. Being that it wasn't of dire need, the re-payment wasnt scheduled or set in stone. Just pay back when you are able to (because of Tony's financial freedom).
Denise and Tony get divorced a year or so after that. Loan was not discussed in being paid back. My husband was raked over the coals through a divorce in the same time frame so Tony never brought it up.
My husband and I have been together for 4 years now and I only find out about this loan situation a little over a year ago. Obviously Im upset because of gaining debt I didn't even know about. But its fine, we will work through it.
Around the same time that I first discovered this debt last year, Denise made a decision to move a few states away to her new boyfriends house. Because of this move, she hasn't had a job in a long time. She is now telling my husband John, to start paying *her* the money back from when he borrowed cash from Tony.
Im pretty confused with this. I don't understand how she is asking John to pay her the money back, when she wasn't the one that loaned it to him.
In addition, there was nothing written in the divorce decree about this loan.
What I automatically think of....Is we start paying his sister back these funds and then Tony comes out of nowhere and demands that we pay HIM back...and rightfully so, because it was his money to begin with and it wasn't listed in the divorce decree.
Any advice? Am I going overboard to think that his sister is trying to pull a fast one and get money from us, being that shes unemployed and has a new boyfriend?
Its never been a thought of mine to have my husband not pay the loan back. I just automatically thought he would be paying Tony back. Now his sister is telling him that he needs to pay her the money and Im worried that Tony will eventually ask.

[disneysteve]

I wouldn't give anything to the sister. John doesn't owe her anything.

I also wouldn't wait for Tony to come asking for repayment. If you have the means, start making payments now. It's the right thing to do. That should have happened a long time ago.

[colejacharris]

Absolutely agree. My husband wasn't the greatest in regards to financial responsibility before we met. I just didn't want it to seem like I was wanting to cause trouble with my thoughts on the issue concerning his sister (other family matters going on in excess).
I had him email Tony today after we talked about it in depth last night.
Thank you for your response!

[disneysteve]

The one thing that is a little complicated is that Tony and Denise were married when the loan was made. Can you really be sure Tony made the loan and not Denise, or Tony and Denise together? If a family member can to me for a loan and I gave it (which would never happen), it would only be after discussing it with my wife and the 2 of us agreeing to do so. If we then divorced, it would be a little fuzzy who that loan was actually owed to.

[Bob B.]

I'm not an attorney, and I really don't know very much about the practice of the law, but when the loan was made, the money, under the law (of most states?), was marital property. Meaning, it doesn't matter who earned the money, once it was earned it was jointly held by husband and wife.

I agree, the payment should be made back to Tony.

If you can do it in one lump sum, do it in one lump sum, or as few big payments as possible.

Ask Tony to sign a receipt indicating he has received the payment(s).

If sister/wife tries to go after the money, you can send her Tony's way.

[disneysteve]

If sister/wife tries to go after the money, you can send her Tony's way.

Exactly. "Sorry Denise, we already repaid that loan to Tony. You'll have to talk to him about it."

[colejacharris]

It wasn't actually a loan taken out from Tony, he withdrew cash from his checking account and 'loaned' it to my husband. So there was no official loan creation in that manner.
Understood about marital property, that's why I am asking around. I have legal insurance through my benefits at work also, so I will most likely be reaching out to them soon in drafting up a payment plan, etc.
I just wanted people's opinions on not paying his sister back and what the path of least resistance is.

[disneysteve]

It wasn't actually a loan taken out from Tony, he withdrew cash from his checking account and 'loaned' it to my husband.

But Tony and Denise were married at the time. It wasn't Tony's money, it was Tony and Denise's money. The two of them made the loan as a couple.

Perfect example of why you should never lend to or borrow from friends and family. It just gets messy.

[JoeP]

Perfect example of why you should never lend to or borrow from friends and family. It just gets messy.

And they get exponentially worse when a divorce or two is added to the mix.

[JulieAlbright]

What I would do is take it out of the backdoor side agreements arena and communicate with all parties what is going on.

I would call Tony and say "Tony, I am really grateful for that car loan you made a couple of years ago. I am ready to start paying it back. Denise is requesting that I make the payments to her and I just wanted to make sure that was okay with you before I started."

Then if Tony says, no I want the payments call Denise and say "Denise, I spoke with Tony and he says that the payments should be made to him. So right now, I'm rather stuck and I need for you two to reconcile where I make the payments before I begin. I was under the impression that the loan was made by Tony and I assumed I would repay him, but maybe it should go 1/2 to your and 1/2 to Tony or something but you two need to agree on this before I start making the payments."

And then let them work it out, and verify it with both of them. Hopefully in writing. And keep extremely accurate verifiable records of every cent that is paid.

[disneysteve]

What I would do is take it out of the backdoor side agreements arena and communicate with all parties what is going on.

I would call Tony and say "Tony, I am really grateful for that car loan you made a couple of years ago. I am ready to start paying it back. Denise is requesting that I make the payments to her and I just wanted to make sure that was okay with you before I started."

Then if Tony says, no I want the payments call Denise and say "Denise, I spoke with Tony and he says that the payments should be made to him. So right now, I'm rather stuck and I need for you two to reconcile where I make the payments before I begin. I was under the impression that the loan was made by Tony and I assumed I would repay him, but maybe it should go 1/2 to your and 1/2 to Tony or something but you two need to agree on this before I start making the payments."

And then let them work it out, and verify it with both of them. Hopefully in writing. And keep extremely accurate verifiable records of every cent that is paid.

I like this plan.

[colejacharris]

I agree that it sounds like the best option...Thank you for taking the time to give a clearly thought out solution. I appreciate it greatly.