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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To lend my friend money?

167 replies

mscrooge · 23/08/2023 07:16

Friend is in really bad debt. He’s overwhelmed with interest fees. He lost the money through an investment in his own business, that wasn’t successful.

I do quite well financially, although I don’t have as much saved as I should (expensive divorce).

We just got into a lighthearted conversation about whether I’d be able to lend him some money, interest free, to clear some of the debt, but during the conversation I realised I actually could.

I am completely against either borrowing or lending money but for some reason I feel unexpectedly comfortable with this.

He has never ever been anything but super reliable, money-wise. I let him use my card for a while when he lost his while travelling, and he paid me back every single penny via bank transfer, immediately after he’d made each payment.

It’s a vast amount of money though. A year’s salary for some people. I can afford to lose it but I certainly hope not to!

We would have legal docs drawn up, which would stipulate the terms. I already have the drafts and I’m pretty comfortable with them.

I’m trying to think it through properly before I go ahead as I don’t want to be an idiot.

Assuming he pays me back, the only thing I have to lose is the interest I’d make having it in the bank, but it’s not a big enough amount to concern me.

What am I not thinking of?

OP posts:
Original poster
mscrooge · 23/08/2023 07:29

He does have a job! He has a different, completely stable job now.

OP posts:
Original poster
mscrooge · 23/08/2023 07:30

continentallentil · 23/08/2023 07:28

Absolutely not

You wouldn’t be helping him at all.

As a friend get him to contact step
change, they will help him get the debts frozen and then he can pay them off and work on why he got into this fix. If he realistically cannot ever clear it, they will help him agree a compromise with the lenders where he pays some but not all of it.

He is not reliable with money or he wouldn’t have huge debt, or at the least he wouldn’t have such badly managed debt

You should never lend money unless you can afford to loose it (and the friendship) and it’s clear you cannot afford to loose it

Pull back, tell him someone has told you about Step Change… and examine why you feel you need to be a Rescuer even though it puts you in a vulnerable position

I said in my OP that I can afford to lose it!

OP posts:
Tiqtaq · 23/08/2023 07:30

Worst case you lose your friend and your money

Best case he's grateful

OrderOfTheKookaburra · 23/08/2023 07:36

Is lending him the money really the only way to help out? And does it need to be the whole amount, would a smaller amount give him sufficient breathing room but allow him to deal with the rest of it on his own, albeit slower.

How will you feel if spends lavishly on something that you don't allow yourself to spend on due to or being outside your budget before he pays you back?

How will you feel about him if he doesn't pay you back, will this be the end of the friendship?

Would you REALLY take him to court if he doesn't pay you?

Would being a "frugal" friend actually be more help? (Someone he can see without spending money.)

LaurieFairyCake · 23/08/2023 07:39

There's a couple of people I would happily lend money to knowing that they would pay me back

This sounds like one of yours 😊

Ilovethewild · 23/08/2023 07:41

Op, if he is overwhelmed with interest fees, he has not sought help with his debts, except from someone else to pay them, the ultimate opt out.

he needs to seek debt advice as they can help reduce fees, manage payments etc. step change or other debt advice is the best option or he contacts his lenders direct and agrees better repayments.

if he is working he can make payments, it may take time but that is how debt is managed.

if in debt, ANY extra money to pay it off is helpful, but you paying it off won’t be good for his debt management learning. And you will lose both him and your money, even if you have it written up, it is just another unsecured debt that he has learnt not to pay.

from someone who has spent years paying off CC debts…

Shinyandnew1 · 23/08/2023 07:44

Pull back, tell him someone has told you about Step Change…and examine why you feel you need to be a Rescuer even though it puts you in a vulnerable position

This.

littlecircles · 23/08/2023 07:44

I think it's very kind but personally I'd be very cagey about getting into any kind of money arrangement with friends. Firstly he's financially tied to you for (presumably) years and anything can happen in your friendship in that time. If he were to default on payments, despite being able to lose it, you'd still feel pretty upset and betrayed.

If it were me and I had cash I was able to afford to lose, I'd give him a gift, not of the full amount but a smaller amount to help him out. That way it's a one-off, you're demonstrating a desire to help him but you're not getting into a financial arrangement which has the potential to turn sour.

AxolotlEars · 23/08/2023 07:44

He needs debt advice. Even if you can afford to loose the money, it will impact your relationship.

terraced · 23/08/2023 07:46

I wouldn't. It will change the friendship completely

molotovcupcakes · 23/08/2023 07:49

I do quite well financially, although I don’t have as much saved as I should (expensive divorce).

You have just been through a lot and you don’t need to be throwing yourself into another stressful situation please just accept that you are emotionally vulnerable at the moment and your friend knows you’ve just received a lot of money, he shouldn’t target you like this.
Give him a token amount if you must and take him to step change- same result.

Mix56 · 23/08/2023 07:50

We see this over & over again on mn.
Lender cones on to post how they have been shafted.
By bf, brother, parent, child, other

My very good female friend lent multiple K to a life time long friend, he did a runner, never seen her since

GoldenSpangles · 23/08/2023 07:53

No. I'd never do this. The fact that he's in financial trouble now suggests that your money is likely to go the same way. You only have his word about how he lost the money. He might have gambled it or just be no good at running a business. Yes, he paid back small amounts before but this is an entirely different matter.

The fact of the matter is that professional lenders have assessed him as a bad risk and won't lend to him. But somehow you feel comfortable! You shouldn't feel comfortable about doing this at all. Even if you cleared some of the debts it doesn't suggest that he'd be making more money immediately and he'd have to repay you too. You don't have to set yourself on fire to keep somebody else warm. What on earth would make you feel comfortable about lending a chap in spiralling debt a large amount of money?

I can almost guarantee that you won't be repaid. If it all goes bad, it will be debtors with security - prior security to yours even if you found something to secure to - who would take priority in repayment.

I work in a commercial field not miles from this area. I get to see the disasters that have unfolded when the gullible hand over their money - often they have lost their entire life savings and their entire financial future is changed. I mean this in the nicest possible way but you are the epitome of that sort of gullible. I wonder who led that light hearted conversation because I suspect it was not chance that the issue was raised.

Mix56 · 23/08/2023 07:53

Oh & I have lent money twice, once for help with motgage deposit, got it back eventually
Once to best ff she paid it back when finally she had become solvent & was booking a mega holiday for her family.. at which point I had to mention she still owed me...
Uncomfortable, niggling, dynamic
Dont do it

pushnpull · 23/08/2023 07:54

Don't get involved even if you can afford to lose the money as there's every chance somewhere down the line you'll realise that while your friend has debts and no money, they will always find money for themselves.

If you respect and value your friend and your friendship, don't loan them money. And at the same time, if they respect and value you, they will neither ask for a loan or decline outright if offered.

CommonVetch · 23/08/2023 07:55

I wonder who brought up the subject in the first place - him, or you?

I would be mortified to ask a friend to help me with my debts. Absolutely mortified.

TheYearOfSmallThings · 23/08/2023 07:57

Don't do it. You will lose the money and the friendship - even discussing it puts the friendship at risk.

usedtobeasizeten · 23/08/2023 07:58

No. 1,000,000 no.

cinnamonfrenchtoast · 23/08/2023 07:59

In the nicest way - don't be an idiot.

LizzieSiddal · 23/08/2023 07:59

Unless you can 100% honestly say “if I don’t get it back, I don’t care” then do not do it.

Winter2020 · 23/08/2023 08:01

The quickest way to lose both your friend and the money will be to lend it.

Unless you are a debt councillor/experienced financial whizz you will have no idea if lending him this money is the best way to sort out his finances and I'm guessing it's not.

Let's say it's 20k he wants. To get it back in just over 4 years he will have to pay you £400 each month. Now there are many many reasons he might not be able yo pay you £400 a month... can't afford to from the offset, high rent, job loss, gets married, goes on holiday, has child, starts new business, simply doesn't choose to.

If he has a low income and his creditors (or you if you are his crefitor) took him to court the Court will only order him to pay what he can afford even if that is £5 each week.

If you are a good friend don't encourage him to set up a debt repayment method that could be completely unaffordable. If he is in problem debt he needs to speak to Stepchange or Christians Against Poverty and set up an affordable repayment plan. If his debts are unaffordable they may be able to get the interest frozen and if all he can afford is £10 a week then that is all he will be asked to pay.

Don't be guarantor on any loan for all the same reasons. If his finances are dire and yours are sound it is you who will be chased.

Offer to help him get all his info together and phone Christians Against Poverty or Stepchange (free to use debt charities). He should not use a company that you have to pay a fee to as that fee could be going off his debts.

Beware I have heard that firms can imitate the charities so make sure you are dealing with the legitimate websites and phonelines.

As a friend you would be much better to take around a takeaway and offer a listening ear while he is in the thick of paying off debt. If you still want to be friends in 4 years don't be his lender.

ringsaglitter · 23/08/2023 08:03

Never mix money with friends / family

WeirdBarbie · 23/08/2023 08:03

Honestly OP, I think even if you feel comfortable with this the dynamic of your friendship will likely change. It's really lovely of you, but probably isn't good for either of you long-term.

I'd refer him to debt services others have mentioned and - if you're feeling generous - gift him a chunk for short-term relief so he can breathe.

Even if you are okay to lose the money, if you did lose it you would inevitably lose the friendship too.

It's really not a good plan, though very lovely of you to consider it.

FedUpMumof10YO · 23/08/2023 08:04

Nah. I wouldn't.

You should never lend what you can't afford to lose.

Autieangel · 23/08/2023 08:06

I wouldn't. A good friend wouldn't ask (unless it was a life/death emergency)

It reads like he orchestrated this. Once you lend the money your friendship dynamic will change. How will you feel if he takes out a expensive car loan or goes on a flash holiday while owning you money? And if he doesn't pay it back? You lose your money and a friend.

I do not see this ending well for you. I'd be interested to see how nice he is if you say no.