Lent Money to a Friend or Family Member? Getting It Back in BC

You lent money to someone you trust: a sibling, an old friend, an adult child. There was no contract, maybe not even a text setting out the terms. Now the payments have stopped, or never started, and the conversation has become awkward.

An informal loan is still a legal obligation if you can prove it. This guide explains what BC courts and tribunals look for, when the clock starts on your claim, and where to file if a conversation does not work.

The first question: was it a loan or a gift?

Most disputes about money between friends and family do not turn on whether the money changed hands. Bank records usually settle that. They turn on what the money was. The person who received it may say it was a gift, a contribution to shared expenses, or payment for help you received from them. If a court or tribunal accepts that, there is nothing to repay.

When money moves between people who know each other well, decision-makers look closely at what both people intended at the time. Repayment terms, conversations and later conduct all matter. The closer the relationship, the more you should expect the other side to argue that the money was given freely, and the more your evidence will be tested.

The evidence that usually decides it

You may have more proof than you think. Gather it before you make a demand, while it is easy to find:

• Bank and e-transfer records. These show the amount and date. A memo line such as "loan" or "for rent, will repay" can be important.
• Messages. Texts, emails and social media messages about the loan, especially any that mention repayment, an amount owing or a timeline.
• Repayments. Even small or irregular payments back to you suggest both of you treated the money as a loan.
• Witnesses. People who heard the arrangement discussed, or heard the borrower talk about paying you back.
• What the money was for. A specific purpose, such as a car purchase or a business start-up, with a stated plan to pay it back, is easier to prove than a general transfer.

If the only evidence is your memory against theirs, the claim is harder, but not hopeless. A lawyer can help you assess how the evidence is likely to be weighed.

The two-year clock, and when it starts

Under section 6 of BC's Limitation Act, a court proceeding generally must be started no more than two years after the day the claim is discovered. For an ordinary debt, that is often the day a payment you were owed was not made. Our guide to the two-year limitation period in BC explains the general rule.

Informal loans often have no repayment date at all. If the money was to be repaid whenever you asked, the loan may be treated as payable on demand. Under section 14 of the Act, a claim for a demand obligation is discovered on the first day the borrower fails to pay after a demand has been made. In practice, the date of your clear request for repayment can matter a great deal, so put it in writing and keep a copy.

Acknowledgments can restart the clock

Section 24 of the Act says that if the borrower acknowledges the debt before the limitation period expires, the clock starts again from the date of the acknowledgment. To count, the acknowledgment generally has to be in writing, signed (by hand or electronically) and made to you or your agent. A part payment of a fixed amount owing also counts as an acknowledgment. Whether a particular text or email qualifies depends on its wording and how it was sent, so do not rely on one without advice.

There is also an outer limit. Section 21 sets an ultimate limitation period of 15 years, subject to the Act's special rules. Old loans can still be claimed in some cases, but waiting rarely helps.

Start with a clear written demand

Before you file anything, send a written demand. It should identify the loan, the amount owing, any payments received, and a reasonable deadline to pay. Keep it factual. A demand letter often prompts payment or a payment plan, and if it does not, it gives you a record of the date you asked. Our article on writing a demand letter in BC covers what to include.

If the borrower offers a payment plan, put it in writing and have them sign it. That protects you if payments stop again.

Where to file if they still do not pay

The right forum depends mainly on the amount:

• $5,000 or less: the Civil Resolution Tribunal. Under the Civil Resolution Tribunal Act and the Tribunal Small Claims Regulation, the CRT has jurisdiction over debt claims up to $5,000, not counting interest and certain expenses. Claims within its jurisdiction generally must go to the CRT rather than to Small Claims Court. Under section 13.1 of that Act, the limitation periods stop running once you ask the CRT to resolve your claim.
• Over $5,000 up to $35,000: Small Claims Court. The Provincial Court hears debt claims up to the $35,000 limit set by regulation under section 3 of the Small Claims Act, excluding interest and costs.
• Over $35,000: the Supreme Court of BC. Larger loans usually go to the Supreme Court, where the process is more formal.

For a closer look at each forum, see our guide to choosing between the CRT, Small Claims and the Supreme Court. Remember that an order in your favour is not the same as being paid; collecting can take further steps.

When family law is part of the picture

Loans to an adult child or a relative's household can become entangled in a separation. If you lent money toward a home, and the couple is now separating, whether it was a loan or a gift can affect how property is divided. Our article on parental gifts and loans for a down payment after separation explains why the label matters.

Lending again? Protect yourself next time

If you decide to help someone financially in future, a short written agreement goes a long way. A simple promissory note or loan agreement should state the amount, whether interest is charged, when and how it will be repaid, and what happens if payments are missed. Both of you should sign it, and you should keep the records of each payment. It may feel formal between friends, but it is the easiest way to keep the relationship and the money intact.

Owed money by someone close to you? Get advice before the clock runs

Our litigation lawyers can review your evidence, work out when the limitation period started, prepare a demand, and advise you on the right forum for your claim.

Call 604-259-2844 or send us a message to arrange a consultation at our Vancouver office.