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.

Drugs/gambling/embezzlement/fast living. Any or all of these. he cant tell his wife because?????
Borrows 25k, pays back 5k then stops. he's a winner. Unless he is in more debt because of Drugs/gambling/embezzlement/fast living.
we all know how this will end. If the OP wins the lottery this w/e then she can gift it as a one off but other wise No

Why is it going to be easier to stop spending now, he's already in default to friend number 1, you're husband is absolutely crazy to even consider this

Are you in the UK? Is he making a loan from the company or taking money out personally that might cost him tax to give to someone else, it's madness. What if your family needs extra money, does he have so much that it would never be a problem?

He's only paying his other "friend" back because he's scared. So in order for him to pay back DH he needs to be scared, ergo,.that money is never coming back.

It's aridiculous notion that jis wife can't know because, oops!, they are just a bit spendy in life. If that is true, they can't keep up payments and if it isn't true then he's hiding something. Think about who he must owe and for what. PS, it definitely is the latter. Noone in their right mind hides that they are falling behind with legit spending. Its not like swimming club or football will let someone fall behind with 25k of payments.

Make sure a contract is drawn up, even if just a simple one. Saying £x is on loan to friend name and address on this date by your husband name and address.

The amount of £x is to be paid monthly over a 2 year period ( 24 payments ). First payment to be on x date. If breach of payment then penalties (% interest to be added) if no payment within 3 months, then full amount to be paid in full or can seek legal recourse.

Then signed and dated by both parties and witnessed by an independent person.

That way, if he doesn't pay, you can always sue him. Plus it's proof of a loan. If friend died before full payment is made, you can still go after the estate to get your money back. Sounds crude but makes financial sense.

Don’t do it !

If husband is taking the £25k out of his business as a dividend, he could need to pay upwards of £1.5k tax on it himself - meaning he is paying to lend his friend money.

would he factor this in to what his friend owes?

either way, please advise him to draw up a loan agreement and ensure his friend signs it. That will at least formalise it in some way.

All good advice but still opening up a huge ball ache for the Op and her husband.

This

tell her so she’s aware and can help her DH sort out the mess they are in.

also your DH can’t just take money out of his business - will be tax implications!

If your husband is to much of a wimp to say no

then he could say the accountant said no due tax implications

or he could say that your a equal shareholder and he had to ask you and you said no fucking way

either way you lend him this money you are unlikely to get it back

do they own a house
if he bought anytime in the last 10 years then he’s bound to have a decent chunk of equity

what’s stopping him from remortgaging to get 25k -

there is no way he’s gonna pay 1k a month

maybe ask the friend if he problems getting the money any missed payments

Taking off my cynical hat for the reason for the debt.... do either of your really think that he is going to be paying back over 1k a month!? Especially if they are living beyond their means?

It doesn't add up.

Owing a friend money because you haven't taken a legit bank loan is a huge warning that they money is not for anything reasonable or legal or affordable. You are being mugged off.

You might aswell change the title of your post now for the future .. DH lent friend £25k and 2 years later he’s refusing to pay it back .

I don’t think I could be with a man who’s such a soft touch idiot . That is £1000 a month he’s gotta pay back Without his DW knowing ??? Come on , surely your DH ain’t that daft?!

This will NEVER be paid back, OP. The monthly instalments will be £1042. How will this man be able to cut back £1042 of his family’s spending every month, with his wife none the wiser? He’s desperate for that £25k and has no idea what it takes to cut his family budget back in secret.

Hold on....why on EARTH would he think he's "getting it back" when this money was already borrowed from another friend whom he cannot pay?

That makes no sense- if he cant pay back the current debt friend how will he suddenly be able to pay your DH back?

This is all a total load of BS. Your DH will lose his money and his friend.

He'll take the money then spin some sob story about how he cant afford it this month but he'll definitely start next month. Then next month there will be some reason why he cant then either. It will be an endless cycle of excuses and racking up more debts. The biggest predictor of future behaviour is past behaviour.

How do you know there's no gambling/drug problem? Addicts are experts at hiding this stuff.
As others have said, how can he guarantee to repay when he couldn't repay the previous loan? There may also be other loans.
The kindest thing your husband can do is to support his friend to get his finances in order. The wife must be informed. She may be able to get a job to help support the family. They may need to downsize. He may already have remortgaged the house for heaven's sake.

While I'm very much of the opinion this is a bad idea, if your DH insists on going ahead with it I'd ask him make it a condition that the mate's wife is made aware of their financial issues. It's not fair on her that her family is in such dire straits her DH needs to borrow 25k secretly.

This is madness. And I doubt it’s to pay back another friend - it’s more debt. Why hasn’t he gone to a bank or anything - probably because he can’t.

I’d put my foot down and insist he tells the wife. Firstly, £1k a month isn’t going to go unnoticed so he needs to be honest. Secondly she can help him stay on track. And thirdly, she might be able to get a job to help cover the payment each month.

Either way, prepare for the friendships to be over.

Is he giving the money directly to the other friend that apparently needs paying back?

No, you say?

How strange, it's almost as if he's not going to use the money to pay the other friend back at all.

Even if it's drawn up and taken to small claims court- if the friend goes bankrupt he wont have to pay it. If the friend ignores the demand for payment after the small claims judgement and still doesnt pay, nothing will happen. I know this because I know someone who took someone to small claims for a loan and they still didnt pay up. They were told they could sue him but that would cost thousands in legal fees, rendering it pointless anyway.

Is there a good reason that the friend’s wife can’t get a job? Either way, she needs to be told (by you) what is going on.

I strongly advise you to tell DH to say no to loaning the money. However, if he insists get everything drawn up legally as pp have suggested.

Why on earth would your DH give a £25,000 loan to someone who borrowed that amount from someone else and couldn't pay it back. Why will this time be any different? It doesn't sound very business-like to me.

Can his business afford to lose the money if the friend can't pay it back?

If his wife doesn't know about either loan, she won't know that they need to cut down their spending.

I would not lend BUT I am curious when he borrowed money off other friend and did he actually make any repayments.

Sounds like he can't afford to make the repayments.

If your dh does this he needs to get it in writing how much he is lending, period to pay back, how much is paid back and pref get it witnessed by legal professional.

Not a chance in hell I’d allow this.
I’d be dropping it into conversation with his DW asap.
Whats the reason he can’t take out an ordinary bank loan / speak to the debt advice services to get breathing space / consolidate his debts professionally!?
He owes a friend that kinda money, and the only way he can raise funds is borrow from another friend… sounds dodgy.

Like earlier posters, I don't think this friend will ever be in a position to repay the loan, particularly if the friend's wife is going to continue spending at the current level. Will your husband accept that he cannot lend this money to his friend if you are against it? Or will he simply try and do it in secret? What will you do if your husband goes ahead?

So if the friend is in finance and he's financially insolvent that puts any membership of official bodies he is part of at risk and therefore his career.

All your dh has is his friends word that he's borrowing the money to pay back another friend, when he could be using it for anything, even illegal/morally dubious purposes in which case your dh also becomes involved as it's his money.
Furthermore, if this friend is a financial advisor he will be aware that your dh will likely be subject to tax on the money he's lending him and if he hasn't pointed that out to your DH and already worked that into the total monies he will owe your DH back then he's being underhand and not fully transparent either and definitely doesn't think much of your dh's intelligence nor have his best interests at heart.

It would be interesting to see what the friend would say if your DH asked to speak to the guy your friend supposedly owes money to, (or to see any agreement plan between the two parties) to verify that's where it's going and it's all above board. But I suspect the relationship between the guy he owes money to has broken down or is no longer amicable which would tell you everything you need to know.

No I wouldn't do this, this will put incredible strain on your husband friendship and could leave you in financial trouble. That is a huge sum of money.

We see in here these things never end well.

His friend needs to tackle this by financing a more appropriate way e.g loan or refinancing a house if they own.

Unfortunately he needs to be honest on his situation and how this happened. Whilst this will be hard to do, in the long term this will be better for everyone.