Friend asked dh for 2 year loan

[ParsnipPuree]

Dh’s closest friend broke down to dh and told him he’s in trouble. Owes £25k to a friend who now needs it back. Dh offered to help on the basis it’s payed back in instalments every month for up to 2 years.

I am friends with his wife who is oblivious. Her dh won’t confide in her. She doesn’t know there’s a problem so will carry on as normal. I don’t think she’s a big spender but that’s not the point. They had a week away shortly before her dh and mine had this conversation.

Im angry because if there was a medical situation they couldn’t cover, that would be one thing but they’re obviously living beyond their means. Dh is taking the money out his company so it doesn’t affect me. If my friend knew she’d be mortified.

Yes I have. I’ve promised my dh. But I’ve also told him the minute he defaults and they go away, that’s when I’m telling her. If he was cheating with another woman than I’d tell her. This is not my best friend.

Your situation was completely different to mine then. You had children together who you were at home looking after. This is our second marriage and although dh made his money after our marriage and affords me equal access to it, I do not see it as mine morally as he earns it not me.

No my husband is absolutely NOT thinking of himself and how he wants to be viewed by his friend. He simply has a kind heart (too kind) wants to help people and does.

You are correct though that I would be beyond livid if he lied to me about our finances or anything else.

I think you’re being naive to think this debt is from living beyond his means because how did it get so high? Why was his friend willing to lend him over £25,000? Was it all in one go? I’d believe it if it was on credit cards etc, but why was this friend financing his holidays? And is now demanding it be returned in full knowing full well he doesn’t have it. Something is fishy here.

How would he be able to repay £1000+ each month without his partner knowing? If. If your husband loans the money, a solicitor needs to draw up a loan agreement so that you have a charge against their home equity, although it sounds as if he doesn't have any. It would be madness to loan the money, he's already failed to repay the previous loan from a different friend and obviously is such a bad risk banks won't lend to him. What if your husband falls ill, his company goes to the wall and £25,000 is with his friend? What if the friend pegs it, from the stress of this this secret loan? Use whatever influence you have with your husband to get him to see sense. It's worrying that he offered the money.

I’d also suggest your husband pay the other friend directly. The friend clearly can’t be trusted with money and might book a holiday of a lifetim on the way to pay him back and end up owing both people £25,000 each

It’s still a marital asset…

This man is committing financial infidelity.

If the friend is lying to his wife about this, then his current financial situation isn’t ’bad luck’ or some sort of freak circumstance, it’s years of mis management of money. Unless he’s completely turned his finances upside down and made some very large steps (such as downsizing his house etc), chances are he’ll be back in the same situation in a few years time.

another thing to think about is c what happens if his friend loses his job, gets ill or has an accident? What legal protection does your DH have for his money?

I’m pretty sure it was on credit cards living beyond their means, interest accruing so he borrowed the money to pay them all off. Dh is going to ask who the friend he borrowed from is.

He probably does this to all his friends and isn’t actually repaying anyone. £25k isn’t a huge amount to get from the bank so he must have exhausted absolutely every other avenue.

So you don’t even know what the original debt was for and have to ask the friend who originally borrowed the money? 🚩🚩🚩🚩🚩🚩🚩

With the contract dh will have with him he could put a charge on his house but he would never do that, I’m just so sick of people taking advantage of him. It’s usually family.. problem is he thinks of him as family.

Surely a couple of 12-24 month % free transfer cards would be better than begging off friends. Thats the usual way to consolidate card debt and freeze interest, he would know that being in finance. He must have really shit credit not to be able to do that.

I'd never do this.
What is the plan to pay the money back? Is he going to change his spending habits to make the monthly repayments? How?
I think this has disaster written all over it.

OP- you keep saying how kind your DH is and whilst his intentions may be kind, there is a big difference between being nice and being responsible.

If he is the MD of a company and anything went wrong with it, they got into financial trouble for example, your DH's decision to lend out an unsecured loan to a friend with a history of financial problems could well be seen as mis managing his company's finances. What happens if this friend never pays it back? does that mean the company will suffer a loss due to an irresponsible decision by a company director?- you really should consider this because it could have big ramifications in the future.

Not only that, but chucking money at someone who has a history of extravagant spending and not being able to budget according to his income and lending money to pay off another lender is irresponsible. People in debt often think the solution is to give them more money, it isnt. The proper solution is for them to learn how to manage their debts responsibly and that wont happen if someone is constantly bailing them out because they never actually learn how to manage their money. They get used to relying on others to fix the problem for them. This "friend" is using deceit, emotional manipulation and even telling your DH that he shouldn't share this with his own wife.

Your DH may be a "nice person" but he is absolutely not a responsible person because doing this wont actually help this "friend" and I use that term very loosely, considering his appallingly manipulative behaviour.

Of course he isn't.

The friend hasn't made any attempts to decrease spending and is just going to accept this lovely gift from OP and carry on as normal.

OP please do come back in 6 months and update us on everything.

He is going to pay back £25k in a year? That is over £2k per month. Unless he has an exceptionally high income that feels very unrealistic.

This isn’t helpful.

If the company belongs solely to her husband (and her) this is irrelevant and scare mongering. The ABSOLUTE worst case scenario (which won’t realistically happen by the way) would be it would have to be treated as drawings so her husband would have to pay tax on it because it would be seen as essentially he took money out of the company personally and used that to pay his friend.

It could cost him money personally, yes, in theory. But it’s never going to have ‘implications’ for his future. And it’s no different in that respect to being paid from a personal bank account as a loan (to get into anyone’s personal bank, you have to pay tax on it) - this just gives time for it to be repaid without that being necessary.

If this was a company owned by a number of shareholders then your answer would be valid, but in that situation this also just wouldn’t be possible so would be irrelevant.

You also don’t know enough about this man or the business to understand the structure of this loan. He may have a business himself and it’s technically a business to business loan, from which he will then draw down the funds as his own drawings or directors loan.

All I will say is that if her husband has built up a successful company, and has a competent accountant, these scaremongering stories aren’t helpful or relevant. What he describes he’s doing to a lay person will not be how he’s actually going to account for the money - he will discuss (clearly has discussed) with his accountant how that’s going to be done.

The ONLY risk would be if the company is at risk of insolvency - which it clearly isn’t. At that point, you can’t dispose of any assets, loan or not, because you need to make every effort to pay your own creditors. But this doesn’t apply to this situation either.

Hope there's something in writing, not that it will help if he can't pay it back. Bad idea, you shouldn't lend anything you're not willing to lose.

If he’s regulated, he also won’t have all ‘normal’ channels for someone in need of fast money open to him (sub prime lenders for example). This would show on a credit check and suggest he’s in financial difficulties - which he is, but losing his license will compound those!

The days of easily getting £25k limit 0% credit cards are all but over. If he’s paying interest, £1k a month may cover little more than the interest payments so he’s getting no chance to get out. The days of getting a £25k unsecured loan easily are over too.

If he has a 90% mortgage (likely if living beyond means), there’s no equity to secure a standard secured loan against (they won’t secure against the 10%).

It is not likely to be as simple as getting the finance elsewhere. Responsible lending regulations mean that where before you could move and shift and move and shift debt, you can’t do this in the same way any more. If you’re flagged as being in persistent debt, even if you’ve never missed a payment, or you sit near your credit limit etc, you are not going to be able to continue to move the debt around.

I am not saying I would lend the money - I wouldn’t. But people saying her husband is just stupid etc, that’s not necessarily true. He probably just understands the difficulties and nuances of the situation better than OP and her post online and knows this is the only
real option for his friend. And he has the means to help and so is going to.

This is spot on.
It also sounds like your DH has a people pleasing problem, wishing to be seen as the great saviour galloping in to rescue people. This is difficult behaviour to manage, because he IS getting something out of this deal, it makes him feel good.

This has got ‘shit show’ written all over it.
I get that your DH wants to help his best friend but he’s not helping him is he? Helping him would be encouraging him to come clean to his wife and helping him to get professional support. Not bailing him out and keeping quiet re the wife and enabling his secretive behaviour!
If the wife knew and your DH can afford to help then that’s one thing but it’s the deceit from all of you that is absolutely abhorrent. She’s blissfully unaware that three people are being deceitful behind her back. Awful.

This is correct - you can withdraw the money as a Directors Loan - as long is it's paid back with a certain time there should be no tax implications :