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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:
Summerrainagain1 · 23/08/2023 08:07

"He has never ever been anything but super reliable, money-wise"

Clearly this is not true or he wouldn't be in masses of debt.

Giv eyou want to give him the money on the basis you might never see it again then do, but don't lend with the expectation you will be paid bad as you will be disappointed.

Original poster
mscrooge · 23/08/2023 08:08

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.

Just to clarify, I’ve been divorced years and definitely haven’t just received money. I earned it!

OP posts:
Original poster
mscrooge · 23/08/2023 08:09

Thanks all. This has given me a ton of food for thought. I’m going to have another conversation with him about getting advice for his consolidating his debt, repayment if I do lend it to him, and a very open conversation about my concerns.

OP posts:
larlypops · 23/08/2023 08:11

It’s all well and good now but if something were to arise and he couldn’t pay, what then.
even with a court order he could offer minimal and while you said you can afford it, could you afford it if you suddenly needed a chunk for renovations or a new car etc.

Autieangel · 23/08/2023 08:13

I agree with an above poster about a no strings gift if you want to help

I'd watch out for his reaction when you talk if he tries to put pressure on you you are being played. But honestly this reads like he's targeting you

rookiemere · 23/08/2023 08:13

How long have you been friends?
Who brought up the subject of him borrowing money from you ?
How good a friend is he ?

I'd avoid if possible. I'm a Mrs Fixit too, but DH keeps me in check.

Bearpawk · 23/08/2023 08:14

What makes you think he can pay you back if he can't service his current debts ?

LizzieSiddal · 23/08/2023 08:16

Glad you’re rethinking.

You should also consider that if he goes to a charity, they may well beable to negotiate a repayment plan which is much better for your friend than your agreement would be.

RaidFlySpray · 23/08/2023 08:18

I'd be more willing to think about this kind of thing EXCEPT that he's obviously not been proactive and gone for debt advice, consolidated his debts etc. This means he's really not as switched on financially as you seem to think he is. That's no moral judgment btw- People have different attitudes to money- but it would make me wary of lending to him.

BarbaraofSeville · 23/08/2023 08:20

mscrooge · 23/08/2023 08:09

Thanks all. This has given me a ton of food for thought. I’m going to have another conversation with him about getting advice for his consolidating his debt, repayment if I do lend it to him, and a very open conversation about my concerns.

That's the thing, you have to be really sure that he can afford to repay it, even go as far as asking to see his incomings and outgoings like a commercial lender would, and also making an assessment of the type of person he is - if he lost his job, would he get another one quickly, or loaf around? Does he appear to be a spender, or a saver? If he had a bit of spare money, what would he prioritise, paying back the OP, or spending it on non essential treats?

Debt run up due to business failure isn't necessarily the same as that due to overspending. He could have been trying to pay his normal expenses on no or reduced income. He could have been left with business debts for rent, rates, equipment, stock etc, which can quickly add up. He could have paid franchise fees or similar and then the business not worked and paid him an income that he expected. Now he's working again, all that has gone but the debt remains.

So if he now has a stable job that pays him enough for him to pay his normal household expenses with a good surplus, and it's just the interest that's killing him, it's not necessarily a hard no for the OP to lend the money.

Original poster
mscrooge · 23/08/2023 08:20

Bearpawk · 23/08/2023 08:14

What makes you think he can pay you back if he can't service his current debts ?

This is something I’m going to ask him more about.

He sold his house, moved in with his brother and got a different job when the business failed, so he could (and is….) making the repayments. But I agree I want to understand more.

OP posts:
Shinyandnew1 · 23/08/2023 08:21

One thing that did help was that he told his family. His reason was in case he died I'd be paid back from the inheritance he'd otherwise get from his parents. But it also meant I knew they would hold him accountable.

If the friend here died before paying the money back, it would be very easy for the OP to no be paid back.

Original poster
mscrooge · 23/08/2023 08:22

BarbaraofSeville · 23/08/2023 08:20

That's the thing, you have to be really sure that he can afford to repay it, even go as far as asking to see his incomings and outgoings like a commercial lender would, and also making an assessment of the type of person he is - if he lost his job, would he get another one quickly, or loaf around? Does he appear to be a spender, or a saver? If he had a bit of spare money, what would he prioritise, paying back the OP, or spending it on non essential treats?

Debt run up due to business failure isn't necessarily the same as that due to overspending. He could have been trying to pay his normal expenses on no or reduced income. He could have been left with business debts for rent, rates, equipment, stock etc, which can quickly add up. He could have paid franchise fees or similar and then the business not worked and paid him an income that he expected. Now he's working again, all that has gone but the debt remains.

So if he now has a stable job that pays him enough for him to pay his normal household expenses with a good surplus, and it's just the interest that's killing him, it's not necessarily a hard no for the OP to lend the money.

Show quote history

This is essentially the exact situation.

He is full speed ahead with paying off his debts. He’s made every possible life adjustment to do so. But the interest is making it a very slow process.

OP posts:
Hesma · 23/08/2023 08:22

Neither a borrower or a lender be…

Icycloud · 23/08/2023 08:22

If he can’t pay the bank back how could he ever pay you back? before agreeing to anything get it in writing how he is going to pay you back

MrsPelligrinoPetrichor · 23/08/2023 08:25

Planesmistakenforstars · 23/08/2023 07:22

Only go through with this if you are prepared to lose both the money and the friendship. Otherwise no way, don't even contemplate it.

Absolutely this, give him money if you want to but absolutely don't lend him any.

Zaaarrr · 23/08/2023 08:34

I'd definitely think about the friendship aspect of it all. How would you feel if your relationship changed over this? There are just so many things that could go wrong.

Ragwort · 23/08/2023 08:35

Agree with everyone else, please don't do this. We did (twice - how stupid) fell for a sob story in both cases that the money was urgently needed as a rent deposit otherwise they would (in both cases) be homeless.
Less than 5% was ever repaid and it was so irritating to see one of these people go on expensive holidays, buy a rare breed ££££ dog Shock yet never repay us. This was ten years ago, one of these people is now literally homeless and sofa surfs as they are so hopeless with money and jobs (no idea whatever happened to the poor dog) .. the other 'friend' has disappeared never to be seen again.
We could 'afford' to lose the money but what hurts even more is to be so casually taken advantage of by so called 'friends'.
Don't do it.

Spacecowboys · 23/08/2023 08:39

Absolutely not, he needs to sort out his own finances.

rookiemere · 23/08/2023 08:39

The friendship has already changed in nature as you are planning to interview him on his spending habits and current debts.

It depends how you want the relationship to be in the future. You being a lender will change its structure. It would be hard to meet socially if he fell behind on payments.

Original poster
mscrooge · 23/08/2023 08:39

Icycloud · 23/08/2023 08:22

If he can’t pay the bank back how could he ever pay you back? before agreeing to anything get it in writing how he is going to pay you back

I am going to, thank you. I’m going to ask many many more questions, and if he’s not prepared to answer them, I won’t consider jt at all.

OP posts:
GRex · 23/08/2023 08:41

Hard no, you would lose the money and your friend if you do this. Leave debt management to experts. Have him call Step Change for advice on restructuring his debt and they can help him make it manageable, if he is actually capable of paying it off. Worst case if you don't intervene is he goes bankrupt and rebuilds from there, not the end of the world.

Bigdoglittledog2 · 23/08/2023 08:43

I’d do it for a friend.

I have lent friends money.

Everything has always been fine and Iv never had stuff drawn up either.

Ragwort · 23/08/2023 08:46

It will be interesting to see how he reacts to your questions, and how on earth do you know he's telling the truth when he says 'of course I will repay the money at £x per month'.
A decent friend would say 'I'm sorry, I've reflected on this and it's too much of an ask .. I am going to seek support from Step Change or similar'.

And see how long he remains a 'friend' if you do say 'no'.

If this is going to wipe out your savings (& you mention the equivalent of a year's salary Shock) how will you cope if you need a new boiler, private medical or dental treatment, your DC have an emergency etc etc?

thatsn0tmyname · 23/08/2023 08:49

Neither a borrower nor a lender be.