Soft Loan

A loan — usually from family (often parents) — that's informal or on favourable terms: little or no interest, flexible or no repayment schedule, and sometimes no real expectation of repayment at all. In divorce finances, soft loans are treated very differently from commercial 'hard' loans because they're often not genuinely enforceable debts. The court looks at the reality: is there a written agreement? Have any repayments actually been made? Is the lender pressing for repayment, or are they content to wait or write it off? A loan from a parent with no paperwork, no repayments, and no demand for repayment may be discounted or disregarded entirely — treated as, in substance, a gift or something that won't realistically be called in. The leading guidance (from cases like P v P and Thomas v Thomas) sets out factors the court weighs: the obligation to repay, the terms, whether repayment has been demanded, and the likelihood of enforcement. A soft loan can still be recognised as a genuine liability if the evidence shows it's a real loan that will be repaid — the point is that it's not assumed; it's scrutinised.