I am owing a friend $70K, want to settle, need advice

[Anonymous]

Hello everyone,

I am new to this forum. Please take your time reading my post and give some advice. Back in 2006 I borrowed $50K from a friend to invest in a business, with a promise to pay back in 2 years with some interest. The business failed, I lost all my savings and piled up a mountain of debts. Unable to pay back my friend in time, I negotiated and he agreed to let me make a monthly amount of $100 until I can find some way to pay him off. I kept paying him until around 2015, when my financial situation took a dive again. I stopped paying him for more than a year. During that time, he tried to contact me but I was afraid to meet him face to face so I avoided him.

Then one day I received a call from a collector. He told me my friend hired him to collect the debt and asked me to sign an agreement to make payment. By that time my financial status had improved so I resumed my monthly payments and have kept it up to now. Because my monthly payments were so little, it’s never enough to cut into the principal itself. As of now, the total debt with interested has grown to about 70K. I figure I will never be able to pay off the loan if keep going like this, so I want to try a different path. I want to settle the debt for a smaller amount. I spoke with a relative and he agreed to help me out. He will loan me the money to settle the debt for less, then I will make monthly payment to him. I have not talked to my friend about it, but I believe he would agree if the settlement is reasonable. Here’re my questions:

1. How much do you think I should ask my friend to settle the debt for? As I mentioned above, the principal is $50K, add interest to it and the total is now about $70K.
2. Should I talk to my friend directly or I must go through the collector? When a creditor hires a collector to collect a debt, can the creditor bypass the collector to make a deal with the debtor? I would rather deal directly with my friend because I know he is easy to talk with.

I do not have hard feelings with my friend when he hired a coltor against me. It’s all my fault. I should not avoid him. I can still talk to him when I need to. This is the only debt that I am carrying now. All other smaller debts have been paid off. 

BTW, I am living in California

[Shooting-For-800]

5% interest would be $99k.

If he wants $70k, you should settle for $70k.

He was your friend not a bank.

JMO

[Veronik2019]

As I read your post. A couple of things came to mind. He must have been a really good friend to lend you $50k without signing anything. He was a great friend when he let you do $100 monthly payments for the next 6-7 years it seems like. Assuming 2008-09 to 2015). Then you stopped paying and ignored him for a year. It seems that nothing happened, not hearing from you at all so then he rightfully hired someone to get his money. I'm not here to judge you, just to put yourself in his shoes. I think the LEAST he deserves is his $50k back. Settling for less is a brick thrown to his face. I think he's still generous that your debt is sitting at $70k. He lent you the money 14 years ago!. Thats like 2 bankruptcies! Imagine the interest on that. If he is so easy to talk to, why didn't you. You took his kindness as a weakness. Stop crying and pay the man.

[CreditCuriosity]

This is why I have a policy never to lend friends money.   Come on CC it is only 5k I will pay you back.  Heard and seen this before and ends up with ruined friendship from it.

With above said pay him at least the 50k back as others mentioned he isn't a bank.  Bank would of been alot more hard than above said friend.

[RSX]

when i see that you have no other debts, i think you start by paying him $1k/mnth

then anytime you get a bonus, send it to him

anytime you want to travel - dont - send him the money

when he calls you - answer the phone

not only did he help you out to start a business, he has major opportunity loss on what he could have now, based on solid investments

the interest amount is pass through - he likely had to pay it - even if he didnt, he could have made so much more in other investment vehicles

i do not agree with any settlement offer

****

i moved to the US in 2010 and had no credit rating here - my friend bought my house for me for $250k

i then refi'd 1 year later when i had good credit and paid him the 75% i recieved with the new mortgage

despite all my other obligations, he received no less than $500/month - all my bonuses were passed directly to him

then 2 years ago, to finish off the outstanding amount, i sold my motorbike and sent him the money (i shouldnt have even bought the bike until i paid him off)

****

do the right thing - pay him off in full - mortgage your place - sell items - refi your car

[Anonymous]

S100 a month was horrible. That couldn't dent anything. Friends and money never mix. You ducking him wasn't cool. Pay him the $70K back. Find a realistic payment plan. I'm sorry your business didn't work out. I know that hurt. 

[iced]

Agree with other posters. Anyone willing to take $100/month against a $50k loan did it because they like you. You likely created the collection situation when you ducked his attempts to contact you -- again, someone willing to take basically nothing wasn't going to give you nearly half as much grief as a bank or collection agency.

I would make every effort to pay the $70k. Trying to settle with someone that favorable toward you on repayment is an insult to them.

[Kforce]

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@Shooting-For-800 wrote:

5% interest would be $99k.

If he wants $70k, you should settle for $70k.

He was your friend not a bank.

JMO

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+100

50K for 14 years with interest is far more than 70k

Pay him the 70k.

[SarahJo]

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I want to settle the debt for a smaller amount. I spoke with a relative and he agreed to help me out. He will loan me the money to settle the debt for less, then I will make monthly payment to him. I have not talked to my friend about it, but I believe he would agree if the settlement is reasonable.

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I would like to caution you on considering once again doing what got you into this issue in the first place, but this time with family.  Contact your friend, make paying them priority #1 and clearly convey that, and then do it...stand up, take responsibility and learn from this experience. Good luck. 

[dunn2500]

yeah you kinda screwed him......he isnt a bank, whats a 15 yr mortgage on 50k.....seems all the fault is you and also assumimg you couldnt get a loan from a bank which is why he is invoved

we are all putting ourself in his shoes not yours.....he did you a favor and you want to settle for less than you borrowed 15 yrs later......if he borrowed 50k from you and this happened  you would have a heart attack......always the ones asking for less would never take less in million years had roles been reversed.....at least in my 52 yrs ive always found this to be true