What do I do when the creditor is a friend?

Rosey_Future

Hi,

I am in tears as I write this message, so I would really value some advice (without judgement) on how to deal with friends I owe money to.

I have been actively working on sorting out my debts and through CCCS (Step Change) I have set up a debt management plan to deal with my creditors (like payday loans, overdraft etc).

However, the one thing my DMP doesn't deal with is the money I owe to friends. When my financial situation got really bad and I was unable to obtain credit, I started to borrow money from friends and I am ashamed to say also from work colleagues. It all spiralled out of control and I now owe money to a number of people. I always had a sob story or an excuse of why i couldnt pay them back. Now my head is out of the sand and I am really trying to deal with my debt, I want to start paying people back.

I have spoken with the debt advisors at Step Change and also to people at Debtors Anonymous (i am in a fellowship that is helping me understand how i got into the mess i am in and also deals with my "compulsive debting"). The advisors i have spoken to have told me to make payment arrangements with them in the same way as i did with the other creditors. The problem i have with this approach is that although its ok to pay BarclayCard and Wonga £10 or £20 a month under debt management, I think its insulting to try and do the same with "real" people. For example, I owe one friend £50 and another £100. I simply couldnt offer to pay them in installments - particularly if I did this at work people would know there is a real problem as they have a good idea of what i earn).

So is it more acceptable to try and pay one person at a time rather than trying to pay bits to lots of people? For example, I can pay one person this month in full and someone else in full next month. But how do i decide who to pay first and how do i even have the conversation? What do I say?

I cant hide from this anymore as I feel the walls are closing in and i cant look anyone in the eye. Its got to a point that i dont answer my phone or my front door and even avoid communal areas at work to avoid bumping into anyone I owe. I am also concerned that if this gets out, my job would be at risk. (If people started to talk or if someone reported it to HR)

So what I would like to know is, how do I do this? I want to sit each one of them down and let them know i havent forgotten them and arrange a time to pay them, but how do I even have this conversation? What do I say.

Its taking me a long time to get to a place that i am finally accepting responsibility and trying to make amends, but I just dont know what to say to them. Can anyone who has been there give me some advice please? I cant keep ignoring people and avoiding their calls when they were so kind to help me.

The ball of fear and shame in the pit of my stomach is killing me. I just want to make things right and dont know where to start.

Sorry for the long message.

sistafromanothermista

Rosey_Future wrote: »

Hi,

always had a sob story or an excuse of why i couldnt pay them back. Now my head is out of the sand and I am really trying to deal with my debt, I want to start paying people back.


I AM SURE IF THEY ARE TRUE FRIENDS THEY WILL UNDERSTAND



So is it more acceptable to try and pay one person at a time rather than trying to pay bits to lots of people? For example, I can pay one person this month in full and someone else in full next month.

I THINK THIS IS A GOOD IDEA

But how do i decide who to pay first and how do i even have the conversation? What do I say?

I WOULD PAY WHO YOU BORROWED FROM FIRST, FIRST AS YOU HAVE OWED THEM THE LONGEST!

SIT THEM DOWN AND EXPLAIN YOUR PREDICAMENT BUT ASSURE THEM THAT YOU WILL PAY THEM BACK EVERY PENNY AND GIVE THEM A TIMEFRAME/PAYMENT PLAN THAT SUITS BOTH PARTIES

I just want to make things right and dont know where to start.

Sorry for the long message.

YOU'VE ALREADY MADE THE FIRST STEP SO WELL DONE!

See my comments above....

gizmo111

I would pay back friends first and make token payments to creditors in the meantime.
make a list/plan of how you can do this and then tell them when you will pay them back.

sistafromanothermista

I also think we need a little more info, how much do you owe in total? Have you agreed payments to the creditors yet?
An SOA is a good place to start as you may need to cut back on what the DMP allows for things like food, entertainment and such in order to pay your friends back...

iolanthe07

I simply couldnt offer to pay them in installments

Its got to a point that i dont answer my phone or my front door and even avoid communal areas at work to avoid bumping into anyone I owe.

If I was owed money by a friend I would far rather they paid me back a bit at a time than avoid me in corridors and not answer the phone.

lindsaygalaxy

My sister 'borrowed' £300 from me 3 years ago. She had no intention of paying me back, even token payments of £5 a week that she initially said she would, she hasnt spoken to me to do this day. My parents said she would rather not talk to me than to have to pay it back. I say talk to them, tell them things have been hard recently but that you will pay them back by x month. Avoiding them will make them think you have no intention of paying them back.

Rosey_Future

Thank you all for your responses.

Since posting this earlier, i bit the bullet and had my first two conversations.


The first was with a someone I owed £100 to. He was surprisingly good about it and said that I should give it to him when I had it - no pressure.

The second was with a lady I owed £60 to. This conversation was much harder. Just the look on her face made me feel like !!!!. She looked so hurt. I basicially apologised for it taking so long and assured her that I hadnt forgotten her. I explained that I had been having some financial difficulties and had been too embarrassed to tell her earlier.

It was a very difficult discussion - however, you were all correct - she wasnt so upset about the actual money, she was more upset that I didnt communicate to her. She said she had noticed that I avoided her and didnt make eye contact when I saw her. She said she felt upset that I saw her as enough of a friend to ask her for it, but was then too embarrassed to talk to her after and felt used. I have arranged to pay her on 26th April. I will really need to do some work after to make amends for how I treated her.

I am glad to have had the first two conversations, I have several more to have and I am not anticipating they will all be as pleasant and understanding, but I am glad that I have the ball rolling.

Rosey_Future

sistafromanothermista wrote: »

I also think we need a little more info, how much do you owe in total? Have you agreed payments to the creditors yet?

In total I owe £1800 to friends and family in amounts ranging from £30 to £400 each.

StepChange did an income and expenditure with me and worked out that I had £320 left to allocate to my debt management plan and they have already contacted the creditors with payment arrangements.

So I guess what I need to do is to see if they would reduce the DMP payment so I can get my friends and colleagues paid off.

Also, In order to make some extra money to allocate to my friends, I have planned to sell some things on ebay that I hope will bring in a few quid here and there. I can also survive for less than the amount the DMP allows for grocery shopping and things. So i think I can find £100 a month to allocate to my friends.

Rosey_Future

I am so keen to pay off my debts, but knowing how to do it and who to pay first is so hard. Its situations like this that had me running off to the payday loan companies.... but i cant go down that road again. I already know it makes things worse. Its such a vicious cycle when you borrow from Peter to pay Paul

matttye

I think most friends would be okay with you not paying them back if you're in financial hardship (unless they are also in hardship in which case they might be relying on money owed to them).

All you can do is apologise for not talking to them about your difficulties before. I'm sure they will understand the shame that comes from being in debt and not being able to afford to do things or pay people back.

If your debts with companies are still accruing interest I would suggest you pay those off first. Your friends won't charge interest and you'll be able to pay them back faster once you have less debts to pay.

If you think it's insulting to pay friends back in instalments, why dont you pay the instalments into a piggy bank or savings account instead then give it to them once you have enough.

dustybin1970

Hi rosey future,

Well done on biting the bullet. I "loaned" £500 to a family member as they were being evicted, I have never got a penny back and to be honest I didn't expect to anyway. He always assures me I will get it eventually but I know I won't. Point is I wouldn't have leant it if I couldn't afford to lose it and at least you are being honest, people will appreciate that and if not then tough you are doing your best!