Demanding a loan is repaid

[Oysterbabe]

At the end of June I received an email from my closest friend asking if I would lend her £1,500.00, which was the shortfall she needed to buy a house. She said that she’s currently paying £750.00 rent and her new mortgage payments would be £420.00, she’s also recently got a new higher paid job and she would be able to pay me back by the end of August. I have lent her £1000.00 in the past to buy a car when hers blew up and she paid back in instalments when she could and there was no problem.

I’m far from well off but I do have a little bit of money in savings that I am able to lend then put back into savings when paid off, so I was willing to help her out. I transferred the money to her straight away.

About a month later DH suggests that we should buy a bigger house. We have a baby on the way and whilst we had planned to stay where we are for a couple of years after considering everything we decided to buy somewhere now. I knew that paying my half of the stamp duty, solicitors fees etc was going to be tight, especially as I’m £1500.00 down but I should just about manage it.

End of August arrives and my friend emails me to say that her brother, who was also supposed to be lending her some money towards the house purchase, has let her down and she’s now £1000.00 short. She had already exchanged contracts but she was unable to complete. Basically if she couldn’t come up with the funds pretty much immediately the house would go back on the market, she’d have to pay all the solicitors costs and would be absolutely stuffed financially. She went to her bank to arrange an overdraft and was waiting for confirmation that it had gone through.

I discussed lending her another 1k with DH and whilst he wouldn’t tell me not to, it being my money after all, he was obviously not keen. However on a selfish note, if I didn’t and it all fell through who knows when she would be able to pay back the initial loan, she’d be in a real mess financially. I sent her an email to say that I wouldn’t see her lose the house and her money for the sake of a grand but at the same time my own finances were going to be pretty tight with our own house purchase and then me going onto maternity pay in the not too distant future. I said I’d lend her another 1k if she had no other options but we’d need to work out a repayment schedule. She said that if the overdraft didn’t come through in time she’d let me know and would be able to transfer the money straight back once it did or she’d set up a direct debit if for some reason she didn’t get it. Next day I get a message from her saying the overdraft still wasn’t showing on her account so I transferred the money and she completed her house purchase.

Nothing was ever mentioned again about this supposed overdraft and no money was transferred back. A couple of weeks later she sent me a message saying they were absolutely skint because of some unexpected moving expenses and could she start paying me back next month. I was a bit considering I had told her about my own finances being tight but said ok.

In the meantime DH and I have had an offer accepted on a house, the purchase is proceeding apace and we anticipate completion within a couple of months.

I’ve had a message from my friend today talking about a couple of big bills they have to pay relating to her old house, they’ve just had the final energy bills which were more than expected and they also have a big bill for storage costs for when they were between houses. She hasn’t said anything yet but I’m just waiting for her to ask for another month before she starts the repayments, I just feel like she’s building up to it.

Would IBU to say no? By a month ago she said she would repay the £1500. In fact she has repaid nothing and borrowed a further £1000. If I don’t get about a £1000 back in the next couple of months I will be short on my half of the fees. DH will be able to make up the difference but he will be pretty annoyed about it. The vast, vast majority of our house purchase has come from the equity from his property he owned when we met so I think that paying half the fees is really the least I can do. However she is a very good friend and I would feel bad about making her find me some money somehow, putting her under a lot of pressure and stress, just so my DH isn’t angry with me. At the same time I do think she is taking the piss a little bit in that she hasn’t ever said anything about what happened with the overdraft or that she was supposed to have paid me back in full by now or acknowledged the fact that the last 1k was supposed to be a very short term loan.

This whole thing is really tainting our friendship.

Thanks for the comments everyone.

Just to address the point about DH and my separate finances, we haven't been together that long (about 2 years, married for 5 months) and we're still adjusting. We have very similar salaries but he has a lot more in savings than me and also owned a house. We have a joint account for bills that we both pay into and split most things 50/50. I like it that way, I want to pay my share. He would and can pay all of the fees from his savings but will be put out if he is doing so due to me lending money to a friend. We'll both jointly own the house and he'll be supporting me on maternity leave so we'll be more blended pretty soon!

I think she will pay me back eventually, she did last time. I just feel like she is ignoring the fact that I need it sooner rather than later, even though I told her. You're right, I need to demand that the debt to me is bumped up the priorities and that she sets up a standing order. And also not lend to her again.

I would tell her that you need £1000 back ASAP as that was meant to be a temporary loan. I would then insist on setting up a standing order for the rest e.g. £300 a month for 5 months. If she won't agree I would take her to a small claims court. Don't worry about losing a friend as she obviously isn't a good one.

I'm sceptical about her story regarding her brother letting her down and needing another £1000 or the house will fall. It sounds like the kind of story a con artist would make up.

You need to ask her direct for repayment in full so you can buy your house just as you helped her but hers. She sounds out of her depth financially and if she got the od will have already spent it elsewhere as you didn't ask for it at the time. I fear your friendship will suffer however she now reacts.

As to your purchase I'd agree with others who say your money needs to be shared. Once you only have mp as income the "yours and mine" system will soon feel unfair.

prioritise the sensible-sounding bloke you are pregnant by/married to over this financial disaster of a 'friend'.

it's not your problem!!

You are married and have a child on the way, you need to stop thinking of his and her finances. The courts will see you as a couple regardless of who had what, who earns what.

I would ask for the £300 per month and get it put into the joint account so your DH sees the benefit of it when it comes back.

It's interesting you said she paid back previous debt 'when she was able'. Does that mean it wasn't consistent repayments and/or you had to chase her?.

Personally, I think she's already defaulted on the 'agreement' and shown you how this situation will go by not paying you back the 'overdraft' and not mentioning it since. I'm sorry OP, but I don't think this looks good.

I would never borrow huge amounts of money from friends anyway but if I was that way inclined and I had a choice between losing a friendship or paying back £2, 500 that I don't have and could potentially not pay back in any case......I'll be very surprised if she engages in conversation about repayments.

The idea that you should never lend more than you can afford to lose completely may apply here sadly.

I agree that you really need to ask for your money back! It doesn't need to be done in an unfriendly way, something along the lines of you now being in the same position she was in & really needing it.

I understand that you want to put some money towards your own house purchase, but I think the easiest option would be to effectively "borrow" your share from DH (I know you don't borrow from your husband, but hopefully you know what I mean) and that make it clear to your friend what you've had to do, and that she will actually be paying him back each month. I'm guessing she would be less likely to miss repayments to someone she doesn't know as well? and who seems to be more financially careful

"I sent her an email to say that I wouldn’t see her lose the house and her money for the sake of a grand" don't give her the impression that you are emotionally invested in her buying her dream property. If she can't afford it, that's just too bad. Now you are already owed money you have an interest in it going through but don't do anything about caring about her. She's not caring about you. Don't make someone a priority if they only make you an option. I am just a bit short of being able to buy a house, I just have to wait until I have enough, I'd never ask a friend. Tapping up a friend who has a bit put away is beyond cheeky, not making it a priority to pay them back is horrendous.

I'd never lend money to a friend either, it's lunacy. If they are a reliable borrower they should be able to get a loan, a credit card or some other consumer product. If they can't, not my problem - lending someone money immediately makes their problem your problem, and if they had the brass neck to ask you in the first place, they will also have the gall to put off paying you back for as long as possible if they ever bother at all, they'd probably be a bit 'meh' if yiu fell out over it

This may end up being a hard lesson for the future with lending money to friends. I think it's just a rite of passage for most people to get burned by at least one friend before refusing to lend money again.

But it doesn't mean you need to give up. She's still a friend, so sit down, talk about her finances with her and ask how she plan on repaying you the 2,500. I would assume that if you lent her that much money, she's probably a good friend and the fact that she paid back money in the past means she's not trying to put you in a lurch.

Next time suggest a credit card to her. They start at about 2500-5000 right off the bat. That's my party line when people ask for money.

Maybe something like I am sorry you have these bills but I also have bills and I loaned you this money expecting you to pay me back as agreed. I need this money for my own bills and it isn't fair of you to prioritise everyone else over me, as though I will just wait until you have nothing else to pay before you give me back my money. It hurts me that you would use our friendship that way. Please stick to our arrangement about paying back my money.

This.

Its lucky this has all been sorted by email, frankly. At least there's a paper trail. She's not a good risk or she could have borrowed this elsewhere. Or perhaps she didn't like the interest that would have meant!

You are too nice for your own good, but please remember that you are prioritising this woman ahead of your own child by your generosity, and don't repeat it.

And heavens, don't lend someone money when they have already failed to keep a promise and have an outstanding debt to you, this proves to her that you are an easy pushover. Get tough, tell her she's completely taking the oiss, don't pussyfoot around her to spare her feelings. You need to fight fire with fire, be assertive, it's the only way she will stop taking advantage. Good luck! Been there with a family member, never again.

Do not, under any circumstances, use the words "I am sorry", "Sorry but..." or anything similar! Don't be angry but be assertive and do not apologise.

Thanks all. I'm going to explain to her that she has to set up the standing order, no excuses. It isn't fair for her to make me short after doing her a favour.

Don't get me wrong, if we reach a point where I think she's not going to repay, I will consider the friendship over and I would issue court proceedings against her and do whatever I possibly could to force her to pay. For example for the initial £1500 I had to sign a form for her mortgage company confirming that I loaned her the money but had no legal interest in the house. I signed no such form for the last minute £1000 I transferred.

Sorry if it's been suggested, not rtft but could your dh ask her? This would mean she is no longer dealing with her friend, but her 'lender' (not that it's his money, but let her feel beholden to him, not you) and she won't feel as free to fob him off.

Ok, your friend is pissing about a bit, but... She paid you back before. She's obviously not great with money, but she has proved before that will repay a loan. If she's never owned a house before (which it sounds like it), she hasn't prepared for any of the additional bills besides all the initial fees and deposit. So, although it's not great, she's just niave. If she hasn't prepared for all the end of tenancy bills, then I imagine she's been pretty skint and unlikely to be spending money on luxury items rather than paying you back. Annoying, but not the worst kind of borrower. Imagine if she was going on holiday! That would be worse.

Your best chance of getting the money back and keeping the friendship is not to allow the negative emotions to come between you. It was bad timing for you - a poor decision on your part really if money is so tight (your friend could fairly assume you wouldn't have loaned the money if it was earmarked for payment only a few weeks later).

Tell her what you are up to (doesn't she know?), with the baby, and your house, and how you were maybe a bit silly to lend her so much when you needed it but can you sit down (face to face) and work out repayment dates together - OR just tell her exactly when you need all the money back, a definite date.

I don't think loans are always bad, but I do think you need to be clear on repayment and not leave it up to your friend to decide when to pay back .... Because let's face it, goven the chance wouldn't most people put it off until they are under pressure?

Stop being embarrassed about discussing this with her. She has no shame so I don't think you need to be considerate and tactful when you speak to her.
The first thing I would do would be to formalise the loan and get something in writing from her. Look up the wording on MoneySavingExpert website. If she cut ally wants to pay you back then she won't mind signing it. The agreement might not practically be that powerful but it's a useful tool in showing her that you are serious about it being repaid.
Does she has anything she can sell or that you could hold as security. Jewellery or a car or something?
Then work out a repayment plan (in writing) and hold her to it. Don't be coy!

You have been a bit silly but hopefully, if you are lucky you will get your cash back.

If she can't get you £1500 now she should Take out a loan!

I didn't think you were allowed to use other people's money to buy a house. I had to sign all kinds of paperwork to say it was my money, nobody else had any financial interest in it etc, and show bank statements to prove I'd saved it. What was she using the money for - it can't have been the deposit.

I discussed lending her another 1k with DH ... if I didn’t and it all fell through who knows when she would be able to pay back the initial loan

Unfortunately, she may have guessed you'd think that way when she asked for the second loan. Given the way she keeps shifting the goalposts, you may also find that the "extra £300" she has a month has somehow disappeared into the mists, along with the £1000 overdraft which - if it ever existed - has probably been spent elsewhere

I really hope you can get this sorted somehow, but personally I wouldn't be over-confident

I've been in this situation before and it sadly ended my oldest friendship. She never paid me back, the final straw was when she went on a Disney holiday!

I think it was the deposit Wizzard which is why I had to sign the letter saying I had no claim on the house. I think she also got her brother to sign something similar but then he didn't give her all of the money he promised.

It is all a bit of a mess isn't it?
I still think she will pay me back eventually but I've definitely learnt a lesson.

brokenhearted55a The reason she hasn't taken out a bank loan is perhaps her naff credit history. I bet shes one of those who hasn't a clue how to manage money. I've seen that here among friends sometimes. Ex wife was like that thought that the moolah grew on trees;!.

Oysterbabe Well you have learnt and its a pity that happened as you are a real friend to have by the sound of it . So be firm with her put her on the spot and best of all get a realistic amount agreed and get that on a standing order and make sure she has. I've e had to retrieve monies from errant customers a while ago and we found that little and often worked best of all. We most of the time got paid but it sometimes took a bit of time which is better then losing all!.

Don't let her put you off anymore. If she asks or doesn't pay, remind her that she had promised you'd have your money back now, that you also have big expenses coming through and you need the money back asap. You lent her the money because you could afford it on the basis of it being promptly paid back. You can't afford for her to keep putting it off.

My mum does the same for me as you've done btw, lends me a lump sum from her savings for rent deposit etc, but I always pay her back in full as soon as I can. If i couldnt I would be absolutely mortified and would be scrimping and saving to pay back something to her. I am also fully aware that I won't be able to borrow from her again if I don't pay it back.