MustI repay a loan that I got from my employer if I was laid off and signed no note?

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MustI repay a loan that I got from my employer if I was laid off and signed no note?

The company I worked for has closed and laid me off. I had a loan from the company which I had been repaying for the last 3 years. There is no mention of repaying the loan in the notice of release that was issued to me and I signed no agreement at the inception of the loan. The company has just remembered about the loan though. Am I under any obligation to repay now that I have officially been released?

Asked on August 6, 2010 under Bankruptcy Law, New Jersey

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Whether or not a "notice of release" means you no longer need to pay the loan depends on what exactly the release said--there is no general answer.

Usually, an obligation under a loan is independent of employment unless it's specifically linked. I.e if a company loans you money, unless the term of the loan is that you do not need to repay after being fired or otherwise involuntarily losing your job, you'd have to pay. The loan would normally not be dependent on employment.

As a general matter, oral (i.e. not written) contracts are enforceable. That means that a loan made on an oral promise to repay is one that could be sued on. There are some exceptions, however, though NJ has fewer of them than many states.

You should consult with an attorney, who can evaluate the "notice of release" and also appraise you of whether your specific loan was one that  would only be enforceable if in writing. Good luck.


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