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When loaning money to family goes bad...

Super Contributor

Re: When loaning money to family goes bad...

Loaning money to a family member always goes bad in some way or another.

10/15/2018: FICO 838 EQ 827 TU 826 EX
Message 41 of 50
New Contributor

Re: When loaning money to family goes bad...


marty56 wrote:

Loaning money to a family member always goes bad in some way or another.


I have not had this happen yet. I loan out funds to my mother every so often because I get better rewards on my cards. I know she can pay me back and that her credit score is in the 800's. So far I have had times I was lazy to do the math but in the end I was repaid 100%. It really depends on what kind of family you have. Most of my family is good at loaning money so when it comes time to repay internal debt  its as simple as having the bank issue a check. It makes sense to know your creditee.

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Message 42 of 50
Moderator

Re: When loaning money to family goes bad...


zerofire wrote:

marty56 wrote:

Loaning money to a family member always goes bad in some way or another.


I have not had this happen yet. I loan out funds to my mother every so often because I get better rewards on my cards. I know she can pay me back and that her credit score is in the 800's. So far I have had times I was lazy to do the math but in the end I was repaid 100%. It really depends on what kind of family you have. Most of my family is good at loaning money so when it comes time to repay internal debt  its as simple as having the bank issue a check. It makes sense to know your creditee.


In my experience, if a family member needs a little extra until payday you're usually fine. 

 

It's when you help out someone without a regular source of income that problems tend to come up.  That's why I mentioned earlier that if there's any doubt (they're between jobs, etc.) simply gift the money and save yourself the trouble (and family problems) - if you end up getting it back, consider it 'gravy', if not no harm is done.  If you can't afford to gift it, then you simply don't have it to "loan" - hard stop.

 

An older co-worker shared these sage words with me years ago.  I realized later how right she truly was.

Message 43 of 50
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Valued Contributor

Re: When loaning money to family goes bad...

I am glad the OP got their money but in my family I handle this differently. I could tell that my neice was in financial trouble, so I was constantly asking her to let me know everyone she owed and how much, as I was sure I could help. She finally took me up on the offer. It soon became obvious that chapter 7 was her only real option. I hired her a lawyer, caught her up on all secured creditors and other bills. In all, I probably spent 8000 dollars, but now for the first time in years she can live a normal life. She owes me nothing. I did this because I love her, and I know that nothing I could buy with that money would feel as well spent. It is only money, and I've never seen a hearse pulling a U-haul full of money. I call debts due me by family members debts only to make them feel better. If it makes them feel better to pay me back, that is OK too. I was always blessed with a good enough job to more than get by, except when I was younger and very irresponsible. I like to think when I leave this world, I made some kind of positive difference in the lives of those I care about. That money may be my best spent money ever.





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Message 44 of 50
Established Contributor

Re: When loaning money to family goes bad...


UncleB wrote:

zerofire wrote:

marty56 wrote:

Loaning money to a family member always goes bad in some way or another.


I have not had this happen yet. I loan out funds to my mother every so often because I get better rewards on my cards. I know she can pay me back and that her credit score is in the 800's. So far I have had times I was lazy to do the math but in the end I was repaid 100%. It really depends on what kind of family you have. Most of my family is good at loaning money so when it comes time to repay internal debt  its as simple as having the bank issue a check. It makes sense to know your creditee.


In my experience, if a family member needs a little extra until payday you're usually fine. 

 

It's when you help out someone without a regular source of income that problems tend to come up.  That's why I mentioned earlier that if there's any doubt (they're between jobs, etc.) simply gift the money and save yourself the trouble (and family problems) - if you end up getting it back, consider it 'gravy', if not no harm is done.  If you can't afford to gift it, then you simply don't have it to "loan" - hard stop.

 

An older co-worker shared these sage words with me years ago.  I realized later how right she truly was.


That really is sage advice.

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Message 45 of 50
Established Contributor

Re: When loaning money to family goes bad...


sarge12 wrote:

I am glad the OP got their money but in my family I handle this differently. I could tell that my neice was in financial trouble, so I was constantly asking her to let me know everyone she owed and how much, as I was sure I could help. She finally took me up on the offer. It soon became obvious that chapter 7 was her only real option. I hired her a lawyer, caught her up on all secured creditors and other bills. In all, I probably spent 8000 dollars, but now for the first time in years she can live a normal life. She owes me nothing. I did this because I love her, and I know that nothing I could buy with that money would feel as well spent. It is only money, and I've never seen a hearse pulling a U-haul full of money. I call debts due me by family members debts only to make them feel better. If it makes them feel better to pay me back, that is OK too. I was always blessed with a good enough job to more than get by, except when I was younger and very irresponsible. I like to think when I leave this world, I made some kind of positive difference in the lives of those I care about. That money may be my best spent money ever.


That's really good advice.  I will follow your example...

Goal: 700's by 11/1/2015 (all baddies will be gone)
Message 46 of 50
New Contributor

Re: When loaning money to family goes bad...

I've had a lot (too many, really) of bad experiences loaning family money.  More often, doing them favors that carry financial impact has hurt me worse.

 

For example, I was selling my truck at one point.  I was asking $6,000 for it but my sister's husband really wanted it.  He could not afford it, and had no access to credit for a loan.  As a favor (more to my sister than me), I let him have the truck for $4,000 and the promise of monthly payments.  Yes, I signed the title to him without getting paid in full (ah, youth....).  Of course, I got screwed.  He paid me a grand total of perhaps $600 before I gave up after 2 years.  6 months after telling him to "not worry about the rest" he calls me, excited.  He had just bought a truck from a dealership, and said "best part, they gave me $5,000 for the Ranger!".  I was speechless:  I couldn't believe that he would a) sell the truck I practically gave him and b) rub my face in it that way.

 

Second example:  the wife's family.  We bought a house 5 years ago that included a very nice 2 bedroom apartment in a detached structure, perfect for renting.  I intended to rent it out using a property manager:  she convinced me to rent to her cousins.  Of course, that mean we were getting far less than we could have.  Over 5 years, they were habitually late in paying us rent, didn't pay for the cable TV and wireless internet access I provided, and in general trashed the place.  We are looking to sell the house now, and of course we had to put a bunch of $ into the rental to bring it up to spec:  new floors, paint, ceiling fans, etc...  In all I probably spent more on fixing it up than we got the entire time they lived there.  

 

I have others but you get the point:  don't ever make a loan or a financial decision with family:  if you do, don't expect to get paid in full.

 

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Message 47 of 50
Regular Contributor

Re: When loaning money to family goes bad...

     This by far is the easiest to answer.  Have you ever notieced that the people you LOVE the most HURT you the most.  The reason is that they know YOU are family and will FORGIVE them.  Not like a stranger who has no ties with them and take them to court, or even get physical with them in order to get their money back. The prey on your inability to hurt them because YOU are family.  This is the worst manipulation that there is.  This is how con-artists start out in life.  They practice on their families then they use their techniques on total strangers and try to wiggle themselves out of trouble.  I knew one person like this and he tried a con on someone he barely knew.  This person ended up in the hospital and walks with a limp now for the rest of his life.  This is why when a family member asks to borrow money I always say "NO", but you can have it as a gift.  This is my choice entirely if I choose but in the end it allows you to keep this family member a part of your family.  This may sound strange but I have seen this happen to so many people. Always remember, "NEVER lend money to family" it just isn't worth it.  JMHO.

Message 48 of 50
Frequent Contributor

Re: When loaning money to family goes bad...

Best money I've ever spent in my life was loaning monies to "friends or family " ! 

 

Best way to never lay eyes on them ,again ! 

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Message 49 of 50
Regular Contributor

Re: When loaning money to family goes bad...

If I can'tgive the money as a gift, then I don't give it. Period.

Message 50 of 50