Withdrawing the offer of a loan

[ChrissieKeller61]

So very good friend, we’ve lent each other a grand or so over the years both always paid back on time. Complete trust.
She needs £7000 to get out of £28,000 of debt on an Iva.
Currently working full time with kids her life is difficult tbh.
We discussed this, I have about £5,000 I was prepared to lend her which I’ve worked hard for and £2,000 of that is my overdraft, she will cover the charges for when paying me back. Not as though this money is just lying around though.
I want to withdraw the offer and this is why. She’s still spending. This weekend it was another £500 on home improvements. Sensible in theory. But why am I going without and living frugally to help her out when she’s not helping herself.

Withdraw your offer. That’s not money you can afford to lose. I thought the point of an IVA was to sensibly manage your debts.

Do not lend her the money. Not unless you're very happy to let it ruin this friendship AND happy to never see the money again.

So what's your AIBU? To withdraw the loan? TBH you were being unreasonable to say yes! She's her a dreadful track record, why would you even consider this?

So the original offer was to get yourself into debt to pay her debt?! That's nuts.

You need to get out of each others pockets, especially if it's escalated to this level, it's madness because it will end the friendship at some point.

Don’t whatever you do go into your overdraft to lend someone else some money!
What home improvements was she spending on? Something like repairing a leaking roof? Or some new scatter cushions for the sofa?

I wouldn’t lend her anything. Why put yourself in debt?

Lease do not let her this money!!
You may never see it again.
My ‘best friend’ of 13 years basically stole £7k from me and I’ll never get it back.
It’s a long story but started out the same way as your situation.

If you lend this person money you are an absolute fool.
There is no way I'd be cutting into my overdraft to give to someone who is in debt up to their eyeballs and likely won't pay me back. She's still spending? - what surprise- why its almost as if her debt could be due to unwise financial decisions she's made isn't it? People like this won't change and you bailing her out will only serve to enable her spending problem for longer. The only way this person will stop spending is if she is forced to do so due to the consequences of her debt. Of course you aren't unreasonable withdrawing the offer- you should never have made it in the first place. Do this person a favour and stop lending her money- its the equivalent to buying an alcoholic bottles whisky

You must not give her the money. Your savings is one thing (though I still wouldn't) but getting into debt for someone is madness. Please don't!

NTA. And tell her exactly why!

From what you’ve said, YANBU. If it was her boiler that broke, or a window suddenly needed replacement, then fair enough. However I suspect that’s not the case?

Personally, I don’t lend money. Done it before, got burned.

I do trust her to pay it back it’s more the fact that she is meant to be saving the other £2000 and she’s not.
She’s off buying nice things which whilst are long term improvements they aren’t essential

You’d be daft to lend her that much when it would be a hardship for you. Going into your overdraft so she can pay off her debt is an awful idea.

Withdraw the offer.

Tell her plainly that you can't let her destroy your credit too. Watching someone add to their debt with an IVA pending is the biggest hint you're going to get... You will lose the money and your credit rating and she will be surprised when you get angry with her.

That isn't how an IVA works, it takes account of all your actual current income. Tell her you've done some reading and any loan you give her might get swallowed up in less interest reduction, plus repayments won't include her informal loan from you which means she won't be able to afford to repay it l you. Given that's how it works, you won't lend anything. Suggest that she goes through all her finances with an insolvency practitioner at one of the firms that specialises in IVA e.g. Step change / IVA-Advice.

Check your overdraft charges too as they are up due to recent rule changes.

God no - YANBU. And tell her why. You would be getting into debt to facilitate her spending and that's not right.

She’s off buying nice things which whilst are long term improvements they aren’t essential

Of course she is- why would you assume she'd do anything different? this is HOW she got into debt in the first place isn't it? are you just expecting her to miraculously become sensible with money because youve offered her a loan? wake up OP! This person has a spending addiction- this is why she's in so much debt. You bailing her out isn't fixing a damn thing- its just delaying her getting better

I'd consider lending a few hundred to a good friend, in desperate need, through no fault of their own. I wouldn't even contemplate it, and certainly not a large amount that puts me in debt, because of overspending. Apart from the risk to my own finances it's not helpful to someone who struggles with debt to prevent them from confronting their issues. You're actually going to make things worse - don't do it!

Claim you have realised you need the money yourself for some non-essential nice things for your home. She can’t very well say that it’s unnecessary spending can she?

Having reviewed many iva and official receivers reports, on general the kind of person who goes through an iva or bankruptcy is not the kind to be trusted with money as proved by their insolvency.

Resentment has already started, and will only fester. Withdraw the offer. This is way beyond an acceptable amount between friends who don't have means to simply write-off the debt.

Ps is she already in an iva? Is this to stop her iva failing?

She’s on an IVA. How did that come about? Most people don’t end up in that situation without there being some serious financial mismanagement going on, and that’s not someone that I’d want to hand over my savings to and* go into debt for, especially not when it’s an overdraft with the changes coming into force in March (40% interest?! No thank you!).

You’re allowed to say no. Especially if she’s still demonstrating unwise financial behaviour.

If she’s got £500 spare she could have paid that off her debt and only had £27500 left on her IVA.

What happens if her circumstances change, or she decides that actually she doesn’t fancy paying you back, and you’re left with a £2k overdraft with an absolutely crippling interest rate and you’ve got nothing in writing that says she owes you the money and she’s already got a queue of people she owes money to via the IVA?

*I'm aware that sometimes this can happen through partners walking out and leaving bad debt behind etc

That's not how an IVA works op
They pool together all the debts. Then write to all the creditors suggesting a payment plan over 5 years and whatever is left is written off. They don't take just a lump sum payment of a fraction of the debt.... Plus all creditors have to agree to it.