crazy situation lending money to friends/family

jamels2

Well I've got into a bit of a mess with this, because I have such a good credit rating, and an overdraft account with my mortgage, I've ending up lending friends/family money @ a rate of 5% interest.

The good thing is I have no other debts except the mortgage, no credit cards or loans. However, it is becoming frustrating trying to get regular payments from the loanees.

I am currently owed over £13,000:
-Friend 1 owes over £6k and is the only one making regular small payments
-Friend 2 owes £2k and has owed money for a few years, it has come down from a much higher figure but am struggling to get him to pay this last bit off
-Family member owes £5k and this is probably the hardest one to bring up the subject with.

All in all, a mess. However, out of the £13k I only have £4k left on my overdraft, so I am being charged less interest than what I should be receiving back with repayments.

I believe I will get the money back eventually, but I am frustrated I have an overdraft. Should I work to pay this off with my own money as well as any repayments? I think this would help me relax a bit more, but on the other hand it is a pain not having the money for myself right now when I could be doing things for myself.

Any advice welcomed !!

Apples2

I was amazed reading that someone had lent friends £13k when having an overdraft.

It reads like you took this decision to go money lending as some kind of investment....
Did you really lend money at your low mortgage rate in favour of 5% repayment income?

Tixy

You are right - it seems like a crazy situation to be in.

It sounds like you are putting no pressure at all on your family member and little on your friends to encourage them to pay you back.

Either you talk to them and ask them to repay you in full or at least start repayments to you, or you accept the position you are in.

I'd thinkthe longer you don't discuss the debt with the family member the harder it will be to ever get repayment from them.

OneLife_OneShot

Have you any sort of contracts stating the interest and repayments?

poppasmurf_bewdley

Did you offer these three loans, or did word get round that you were an easy touch?

To be honest, I've never heard of anything so stupid as to lend money you have borrowed. Only banks do that but they do it at much larger margins than you have been trying to do.

Do you have any form of agreement in writing from the three debtors?

DCFC79

Thats is a hell of alot of your own money to lend to friends and family.

poppasmurf_bewdley

DCFC79 wrote: »

Thats is a hell of alot of your own money to lend to friends and family.

But it's not his money - it's his overdraft. It only becomes HIS money if any of the borrowers default, and then it becomes HIS debt!

DCFC79

poppasmurf_bewdley wrote: »

But it's not his money - it's his overdraft. It only becomes HIS money if any of the borrowers default, and then it becomes HIS debt!

Yes sorry, just wasn't concentrating.

jamels2

No written agreements just updates via email and one has a spreadsheet.

I have emailed 2 of them today with an update and asking if they could please try and keep repayments as regular and as much as possible.

I didn't do it to earn anything for myself, just to try and help. One would have probably lost his house, another would have lost his flat. Maybe people have to hit those lows though and not be bailed out?

I guess it also is a 'test' of friendship. Not that this was the intention, but I know now which people have the right intentions. I know if I owed anyone money I'd put that as top priority, not spending on anything else first. I'd also pay regularly - however small. One of my mates seems to think one large payment at xmas means he can get away without paying anything for another 3 months.

I only have about a third of the total on my overdraft, so it's not a case of I can't to lose it, it's just the frustration of things dragging on so long.

27col

I suggest that you read the sticky about lending to family and friends and also many of the posts about the subject. It almost never seems to end well for the lender. If you keep bailing out bad managers, they will never have any reason to learn to control their spending.
As for bailing them out on overdraft money, well, words fail me.
You need to get to grips with these spongers or soon you will find that all their debts have become your debts.

smithers1981

Is there anyway i could apply for one of these loans off you? 5% interest and no obligation to pay back I'M IN!