AIBU to object to my husband taking a large loan for a friend?

[Sefal]

My husband has had a friend for some 40 years, it is probably more accurate to describe his friend as being like a brother to him.

His friend has recently got into some financial difficulties due to a building project costing more than expected. His friend has no way of obtaining money to finish the building project, and without money to finish it, the whole project will need to be ‘written off’, essentially throwing tens if not hundreds of thousands of pounds away and facing bankruptcy. My husband then offered to get a loan out for a lot of money (tens of thousands), to give to his friend on the promise his friend pays it back (plus the interest) when the project is completed. His friend has leant him money in the past, but it has always been from his savings never anything like this. It’s also been small amounts - a couple of grand here and there.

I think this is absolutely insane. Me and my husband both earn very well, but we do not have any savings and have loans and debts ourselves. We have also committed to some very high expenses ourselves for the next few years, and my husband in particular has been very anxious about money, which has in turn made me very anxious and I have been trying to find ways to increase our income. This loan would be hundreds of pounds a month, which as I pointed out, why are we worrying about money when my husband can afford an additional hundreds of pounds on a loan?

I also pointed out things such as:

what if your friend can’t pay you back
what if the project costs more
what if you need it paid off and your friend wants more time
what if your friend falls ill
what if you lose your job
what if you fall out with your friend

Essentially pointing out all the reasons why this is nuts. I also told him that if he chooses to do this, I won’t be supporting him nor will I be taking any notice of his fretting about money or wanting to live frugally. I’ve told him if it affects our lives e.g him saying we can’t afford something, I’ll be reminding him of his ridiculous loan. We’ve had a massive argument because of it.

AIBU?

Very good point.

Given your own debts and school fees its very very unlikely he would pass the affordability checks.

Doesn't get through to him what a dick he is being though, sadly. Because him and his friend will blame it on the bank.

All schools are different. £50k odd a yr for some near me & I'm not sure if that's with vat Inc @ 20%

He’s planning just to pay the monthly amount out of his salary (which is news to me as a few days ago we needed to tighten our belts).

My sister's exDH forged her signature to borrow against their jointly owned house.

This situation is so tricky. If I had person as close as a sibling that needed help I was able to give, to stop them losing everything (going bankrupt), I would like to think I would try and help.

However, in this case it seems your DH hasn't done any due diligence on how secure the project is with the additional finances. As others have mentioned, if the project is in such dire circumstances that they can't get further lending, £30k isn't nearly enough to solve the problem. And the messages from your DH are contradictory. He wants you to tighten belts but has enough spare cash each month to cover the loan?

Your DH clearly has too much emotion tied into this situation. Instead of outright disagreeing with him, perhaps it would be better to try and be a bit more open to the situation, in appearance at least. And approach it more like an investment than a loan. There were lots of unanswered questions mentioned in other posts about the project, that your DH hasn't asked his friend yet.

As high earners, and assuming intelligent people, could you and your DH initially sit down with his friend to go through the finances of the project? Help with an additional pair of eyes, ensure it isn't just throwing more money at a bad investment. If there is a genuine way out of it, you will then be more informed and comfortable. If, as expected, it is a sinking ship, hopefully your DH will see it more rationally and understand why it is a bad idea. And then your DH can focus on helping his friend recover from the situation, without a bad loan also involved.

Yes @PyongyangKipperbang I’d never do it again (and I did it for someone who has the money) - @Sefal ‘s DH seems intent on going ahead so all OP can do is steer clear/minimse risk. But as others have said, ‘don’t lend money you can’t afford to lose’. A No from me.

This sounds insane. If the project runs over even more and the friend ends up bankrupt, your DH will not get his money back - and there is no way that will not impact you. Really hope your DH comes to his senses.

I too think this is an insane plan and many friendships have ended due to loans given in trust then not repaid. It would be different if it was savings but if you don’t have any plus high outgoings even on high salaries you are living precariously. Given he will have to lie to a bank as to the reason for the loan plus his already high level of anxiety over money he has obviously not thought this through.

Why at people so concerned about this man 'saving face'?
If he's enough of a grown-up to make decisions about lending 30K, he's enough of a grown-up to own it when he's misjudged and tell his friend so.

Oh no that is absolutely diabolical, there is no way in hell I’d be supporting this, all points to consider -
— your husband will have to commit fraud to obtain this loan in the first place

— you’ll be having to add this loan payment to your monthly outgoings for a minimum of a year but likely much longer on top of your current commitments

-If this friend has run out of money for his project 12/18 months before completion I would seriously question his ability to organise his funds properly and actually get this project over the line, there’s a possibility that it will still fail even if your husband gives him 30k.

-If your husband ends up being the only person who agrees to lend him money, no doubt the friend will take it and spend it in the meantime while trying to find other ways to fund the project, if these dont come through 30k is not going to get that project finished so the money will just be lost.

-your husband is not only banking on the friend having the integrity to pay him back but he’s also got to bank on the project getting finished and all of the other people this friend is asking also giving the money.

-This is just a huge huge risk for zero reward, you’ve got existing commitments and you’ve got a family to think about and your husband needs to make the right choice for his family, this isn’t in your best interests.

-IF the project gets completed your husband is going to be one of the very last on the list to get his money back because the friend will prioritise paying back the banks first.

Your husband sounds like a really kind man and a great friend but doing this would be absolute lunacy and potentially put your family into a precarious financial
position.

I think he should just be honest with the friend and say he’s sorry, he initially thought he could take out this loan but after going through your finances and taking your current commitments into account it’s just not affordable for him to do without putting yourselves at risk/ it’s not affordable to take on this extra monthly payment at the moment because you’re already having to tighten your belts in other areas.

You’re his wife and he absolutely should’ve spoken to you before telling his friend he could lend that kind of money and I would be upset about that. You’re married and large financial decisions like this need to be agreed by both parties as it will impact the family.

These are all the points I’ve made to my husband, I’ve also made points such as what if your friend dies or falls ill (I know it’s unlikely but still possible).

Without going into too much detail, we’ve had a lot of stresses and strains on our family and relationship the last few years - not just everyday stress but serious and unexpected awful things - and this would genuinely be ‘the straw’ for me, I couldn’t cope.

Have you told him that’s how you feel about it? That this is the straw? Because if he realises he will lose you maybe he will change his mind.

the only other thing that I can think is that you reach out to the friend and tell him that it is a marriage deal breaker for you and that might make him tell your husband he doesn’t want it anymore

No, I haven’t had the chance to revisit the conversation again, but will be able to today. I am going to raise the same points again, say we cannot get this loan out, and ask if there are ways we can help that aren’t financial.

I’m not sure I’d want to directly reach out to the friend as it already feels awkward and embarrassing, husband needs to address this with him.

I can't help wondering if he owes the friend a significant favour of some kind which the op doesn't know about?

There's a CVL Research Report carried out in the UK which found that 94% of unsecured creditors receive nothing in a insolvency case.

Your husband's friend has all the signs of heading towards insolvency given he can't raise finance from anywhere other than friends.

Your DH might as well burn the money.

That would be a marriage breaker for me.

Risking your whole family financial stability for a friend - big fat no.

Any chance DH has something to hide and friend is blackmailing him?

I don't know if it would help with your husband, but could you send him an email in the format of a business proposal, with the due diligence questions, and ask him to address each point with an actual answer, rather than a nebulous 'I'm sure it'll be ok'?
Just wondering if he can see it in black and white with the heat and emotion taken out, he might realise he probably wouldn't advise anyone else to go ahead with it?
Not sure if that will suit your communication style, obviously. Best of luck with it.

I am not sure that this would be successful as my husband is so emotionally invested in it, he’s not thinking rationally at all.

The friend won’t be able to pay your husband back when the project is complete.

Nobody who has a young family should make any major final commitments like a loan, unless there is a concrete long term benefit to them and their dependants. There is no long term benefit here apart from the friend's enduring gratitude, and that won't be enough; even presuming the loan is repaid eventually (it probably won't be).

I hope your husband sees sense because at the moment it seems he is willing to jeopardise his family's future just to stay in his friend's good books.

I would be very concerned that this may not be the first time he has been cavalier about money (unbeknownst to you) which could be at the bottom of his anxiety and expectation that you tighten your belt.

I hear you and can imagine your frustration, but surely a dispassionate email that makes all the points, and set out as a business case as @Easilyforgotten suggests, will be less emotionally fraught and easier for your DH to at least consider than you trying to put the same points to him in a conversation. I also think it's imperative that you spell out to your DH what the consequences are going to be for your marriage should he go ahead with this. He needs to understand what really is at stake. And if he's still being a blockhead, I would contact the friend to at least tell him that you are not happy with this at all and are in all likelihood going to end the marriage over it. It's so important that I wouldn't worry about it feeling "awkward" or "embarrassing". Both these men need to grow up and face reality.

I think you need to knock some sense into him. I'd tell him you will divorce him if he takes out the loan because he obviously cares more about his mate than his kids.

Any man who proves to his wife that their marriage is a 'house built upon the sand' must expect to lose that marriage in very short order.

If there is likely to be profit after existing borrowing has been paid then he’d have access to a loan himself, secured against the property. The fact he doesn’t means the banks have concluded that even after a sale there won’t be enough money to repay them. So why would your husband think he could get paid? He will be last in the queue for repayment.

Your husband can trust his pal all he likes and that might even be well placed, but if the pal defaults on a payment to another creditor then he could find himself made bankrupt and then your husband is dealing with the trustee in bankruptcy and not his pal. The trustee will pay creditors in order of the statutory priority and unsecured debts will come bottom of the pile.