Lending money to family

[CatMakesFive]

Would you lend money to a family member in these circumstances?

I’ve been asked by my cousin to lend her £2.5k for rent arrears. Her landlord has tried to work with her by setting up a payment plan apparently but it’s not worked out and they are now ready to start the eviction process unless she clears the debt. It sounds like it’s been dragging on for almost a year with her paying some, then not, but she’s being quite vague about the timings.

She works full time, has children but gets no financial help from their dad. I don’t know where she would live if she’s evicted. What would happen?

I can easily afford it but I don’t think I’ll get it back, at least not all of it. She says she could pay me £200 per month back but based on what’s happened with non payment to her landlord, I doubt that. I could afford to write it off if she doesn’t pay so that’s not the problem. I wish she hadn’t asked. I feel selfish as it’s not an amount that would be a problem to me but I’ve always had the mindset of not lending money to anyone as it causes issues and a big part of me feels she needs to sort this out herself.

Would you lend her the money?

YABU - Yes

YANBU - No

Even if she believes she intends to pay you back, it is quite obvious that she can't. She hasnt been able to pay regular rent (hence the arrears) so there isn't a hope in hell that she'll suddenly find herself able to pay regular rent AND repay the loan for arrears. So it would have to be a gift.

But also you need to consider that she has got into this mess already and so it's likely to happen again. She just can't afford the rent so staying there is untenable, unless you are willing to keep gifting her money every time her arrears build up again. Are you willing to accept that? Because otherwise the risk of eviction will keep cropping up repeatedly.

Can she move to a cheaper property? That seems the only realistic solution unless there is a way she can imminently increase her income.

As others have said, you giving her this money might just be "kicking the can down the road" so it would be a complete waste.

WHY is she in arrears? Can she really afford to live there?

Unless you get answers to these questions I'd be a No, Sorry.

Exactly what I would do.

Why doesn't she get financial help from her children's dad? Has she put in a claim for maintenance to CMS?

If she wants your help, she needs to stop being 'vague'. If her salary is too low for her to afford to pay the rent on her current home, you are only postponing the inevitable by giving her money to pay off the arrears. If her salary is sufficient for the amount of rent she needs to pay, why has she gone into arrears?

Doesn't she have other closer family, such as parents or siblings, who can help her pay off her arrears?

A friend said that I should ask to have a look what’s going on with her finances to see what is realistic to pay back per month, but it feels so intrusive. Friend’s opinion is that she can’t ask for that amount and expect me to give it without being transparent.

She hasn’t said, so I presume she would think I’d give it to her. I hadn’t thought about paying the landlord directly, that may be best if I do decide to give the money.

If she wanted to borrow money from a bank, they would expect evidence that she could afford to repay it, so they would ask questions about her finances, her income and her rent/bills amount.

They'd also look at her credit report to see who else she owed money to and her history of managing all her current/credit accounts. Your friend is right that it is reasonable that you are aware of the state of her finances before lending her this money.

She says she would pay the money back at £200 pm, but the fact that she's in rent arrears suggests that she won't do this either because she can't afford to, or she persistently fails to manage her money responsibly, ie because she spends her money on other things in favour of one of her highest priority outgoings.

If you can afford to lose it then yes, but as a one off. It sounds like you’d just be kicking the eviction can down the road a bit.

Nope nope nope. Just because you can afford it doesn’t mean that you should do it. If she hasn’t been able to afford to pay the rent, she won’t be able to pay you back plus whatever rent she will be paying on another house. I speak from experience; a lot more than £2.5k for a relative who I never thought would let me down. Took 7 years and an ultimatum in the end. All sorts of lies and stories and when they inherited (and sold) a property later, there wasn’t even a ‘here’s a few quid for all the shit we put you through’
Relationship has never been the same since

If you do lend it to her, you do need to pay it straight to the LL to make sure that he actually gets it.

If you do set up a repayment plan, do a smaller amount over a longer time, so that she can actually afford to repay it. I agree with PP that you should sit down with her and look at her finances before making a decision. It would help you to see what she can afford to repay you and also see if she is making poor choices. If she is blowing all her money on crap rather than paying the rent, then you know not to lend it to her.

She clearly needs some help to manage her finances if she is that much in arrears. Some people don't live in reality, and think that going out, or buying everything they want etc is more important than paying bills. I had a client crying down the phone that they couldn't afford to pay my invoice, while plastering pictures all over social media of them out having a good time every weekend.

If this was me, I would give her the money. I say 'give' and not 'lend' because by your own admission you know you are unlikely to get it back, but as long as you are honestly happy with that and won't resent her for it, then do it. This poor woman is obviously trying her best and think of her kids, what will happen when they lose their home? If you can use this money to help, then I think you should.

Is there a way of doing it in a "this is a loan but the condition of that loan is we look at your finances together to work out how this doesn't happen again"? It's up front that way. I guess equally she might feel frustrated that you've attached strings. I think I would have to treat it as a gift (in my head).

I leant a friend quite a big sum of money and it surprised me how much it pissed me off e.g. when she was late paying it back but had booked a holiday or whatever. It actually always turned out she had just forgotten and did pay as soon as she was reminded but I didn't enjoy having to remind her. To this day I still don't know why she didn't just set up a standing order and deal with it that day.

I’m assuming that you are close & that she can’t borrow the money from anywhere else. Also, I’m assuming that getting herself rehoused in the current climate will be difficult & that she won’t be able to afford the costs of moving, a deposit, rent in advance etc. - plus the impact on her children of course, possibly including new schools etc etc.
If you can afford to give it to her then do so, out of kindness.
As PP have said, she needs to be aware that this will never be repeated

Offer to help her with budgeting as she sounds like she needs that.
You say the father doesn’t pay for his children. Time for her to contact CMS and make that happen!

Best wishes to you all x

eta - offer the help rather than force it as a condition of the money, as I suspect the latter could be felt as intrusive or infantilising. If she insists on repaying then a manageable such as £50 a month might be sensible, especially if the timing is from when the CMS payments start.

If she can’t afford, or doesn’t prioritise, her rent each month, she won’t be able to afford to keep paying the rent and pay you back. But sounds like whether due to cost of living or poor prioritisation she can’t afford her current outgoings.

Cleanest to say no now tbh. Otherwise either you poke in her finances and likely say no, or you lend it and it will likely lead to problems down the track when she doesn’t repay you, she gets annoyed with you (unreasonably but happens) and you with her.

Different if, say, she had been made redundant or had a big financial hit and she is now back on her feet

Yes I would help a family member to prevent eviction and homelessness or temporary accommodation.

However, I'd want to see evidence that this debt exists and is not a debt for some other (frivolous) reason. I'd get copies of the notices from the landlord, and the details of the amounts due.

If all is above board then I'd arrange to pay it directly to the landlord. I would not give it directly to her.

To add, I’ve seen this dynamic play out with people I know well and it killed off the relationship. Borrower has an excuse every other month about why they can’t pay this month and just expects lender to accept this. Lender gets annoyed when money spent on non-essentials (nights out, nice clothes, new tech, nails done) then 2 weeks later borrower is pleading poverty. Borrower feels treated like a child and gets annoyed if this is raised. Lender thinks borrower has priorities wrong and is taking the piss. Relationship breaks down.

After having my fingers burnt and still burning as I’m paying the loan I would never ever lend money again to friends or family

i struggle and begrudge every months payment

you say you can afford it but I think you need to look on it as a gift and it won’t be repaid back - but if any does it’s a bonus

as she has let her LL down and risked losing the roof over her kids head , so why would she bother paying you back

giving to LL is a good idea and be interesting if it is that amount

going forward - how will she pay her rent ? Is it too much for her via her income

will the same thing happen in a years time and she will want to be bailed out again

Any money given is just kicking the eviction can down the road for a few months. You're better to offer practical help and support to get rehomed.

If I could afford to gift it to her, without the expectation of getting it back, then I would only offer it on the condition that I pay the landlord direct to clear the arrears, and that it would be a one time gift. Maybe she needs some budgeting help, there are a lot of places that help with this, citizens advice , for example.

She hasn't paid her landlord. She may or may not pay you. It's fine to give away money without expectations. I think it's the expectation of getting it and then not being repaid which is hurtful. On the whole debt is a complicated issue. I'd wonder why she got into debt. What does her budget look like? Paying the landlord direct could be a good idea. She's under no obligation to talk to you about her situation and do you want to be that involved? She doesn't sound as if she is actually being upfront and honest about her situation. How will you feeling she is in the same situation in a years time? How will you feel if you pay the debt and the Landlord evicts her anyway? It would be understandable if he did

If you can afford to write it off I think you should say, with kindness, that you will give her the money but it is a one time thing and wont happen again.

She probably feels desperate and terrible asking, punitive & intrusive demands to see her finances would be even more humiliating. But - you could ask if it might be helpful for you to go through her finances together to see if there's things you could recommend to help.

No, I think debt between friends/family leads to problems. I would give her the money though if I could afford it. But if you do that you must never think of it again or query any of her expenditure.

The only circumstance in which I'd lend a family member money is a short-term emergency not of their own making.

In this situation, she has a long term pattern of not being able to pay the rent.

She's also not able to abide by the payment plan set up.

There's no way that her finances are going to change so that she can suddenly pay rent + £200 to you each month. The most likely outcome is she'll pay nothing back to you and immediately get back into arrears with her landlord then come back with her begging bowl.

She needs to find her own way out of this hole.

It’s a gift. If I cared about my cousin yes I would give it to her, but I’d make it clear that it was the only time, and she needn’t worry about paying back but could I help her rework her budget? Maybe she needs that kind of help too so she isn’t in the same position three months down the line.

It depends how much you want to help her. You're not under any obligation and probably wont get it back.