Lending money to sibling

Spendless

I've been on this site for years read many a time 'don't lend what you can't afford to lose and STILL lent twice - to the same person.
When the first was re-paid months after the agreement, I was asked again late last year for 3 times the first amount. I agreed because covid had hit finances and they gave me a date they'd be getting an amount from The Government. Though they repaid on that date, within 36 hours, they'd asked if they could borrow some back. Knowing where it was heading, I told them I'd already used the money and didn't have it. I refused other small requests again saying I didn't have it, but gave on one occasion as a gift, saying I didn't want re-paying. The same scenario has happened in my family where a loan hasn't been repaid and caused issues in the family relationship. Generally if someone isn't good with money, they're not good at repaying unofficial loans back either. 

SeanG79

If this financial issue is going to be the end of their marriage, then you giving this money will only be a plaster and it will fail a little way down the road. Once that happens you are unlikely to get your money back as your sibling will likely be unable to pay you back due to the change in their circumstances. 

Unless you can simply gift this money, don't even think about lending it

sheramber

So your sibling's spouse thinks she has a spare £13,000 in her bank account to pay for half the cost of new windows, but she doesn't have it. She mistook what was in her account! 

That is a very large amount of money to mislay.

Where did it go?

If you give this money it will be a gift, not a loan.

Where is she going to get £13,000   to pay you back?

TBagpuss

OP, I agree with those saying don't lend the money - you need it, and it looks both as though your need is as great if not greater than theirs, and that there is a real risk that you would not get the money back.

I would also suggest to your dad that if he decides to lend the money himself, that insists on having something formal in writing recording the loan - perhaps point out to him that in the event that your sibling's relationship breaks down, having proof that it was a loan not a gift would prevent the spouse being able to keep half of the money! 

You could also say to him that you are really worried that while you understand that he wants to help if he can, it may not help to assist your sibling in hiding things from them spouse, and in getting deeper into debt,.

I would suggest that you encourage your sibling to get help with their finances - maybe point them to the boards here, or, if they have significant debt, to Stepchange, and also encourage them to get support regarding the relationship - and perhaps remind them that Relate will see one spouse or partner even if the other doesn't want to go, so they can get help to assess the relationship, where they want it to go and whether that's likely to be achievable, and that their GP may also be able to refer them to suitable services.


In terms of loans - there are some jobs / professions where you cannot continue if you made bankrupt, and others where you may be expected to have regular credit checks - normally, the issue isn't with having credit but with being in serious debt such that there is a concerns that you might be tempted to steal from your employer / clients. So I suspect that either : 
- Your sibling's spouse has lied to them
- your sibling has misunderstood what their spouse has told them
- your sibling has lied to you 
- your sibling/their spouse already have so much debt that the only borrowing available to them would be from payday loads or other poor credit offerings, and that Spouse's job would be at risk if they went down that route.

Any of which would leave you very exposed if you loaned them the money, as there's a strong possibility that they would be unable to repay it or that their relationship is so poor that a breakup and all the complexities of that are a real risk - and again, at that point, your sibling will say they need the money to rehouse and they may struggle to release funds t pay you back.

Would you prepared  to sue them to recover the debt, if they didn't pay? If not, how would you deal with it if they didn't repay you?  

MrsStepford

boldaslove said:

Hi all,

My sibling and I have a good relationship and although we don’t get to see each other as often as we’d like (we live at opposite ends of the country) we speak regularly and are on good terms. Several years ago our mother died unexpectedly - to cut a long story short we had to sell her house to pay off the debts she left and we split the remaining money equally between us.

Some relevant backstory:

I’ve since stuck my share of the money in various savings/bonds accounts and I’m now going to use the majority of it to purchase my first home with my partner, with some left over as savings for retirement and a safety net. It’s been a tough year for my partner and I : COVID essentially meant I was redundant in 2020 as I’m self employed and work in the events industry which all but collapsed last year. Work is slowly crawling back now but is very uncertain, to the point where I’m applying for salaried jobs in other sectors in order to ensure some security for us. Additionally my partner had a health crisis before Christmas last year and had life-changing emergency surgery. They’ve been on long term sick ever since and are only just returning to work now, plus they’ll need another major operation in the future which will require further time off and we won’t know when this will be. We’ve been living with my partners family for the past few years while we prepare for buying our house and we live pretty frugally.

My sibling is married with a young child. Both they and their spouse have good stable jobs and are comfortable as far as I know. They own their home, have 2 cars which they change up fairly regularly, are always getting work done to the house, they can afford decent food from places like Waitrose and are often buying their child expensive toys and games. No criticism from me here; they’re entitled to live they way they like and I’m happy for them. My sibling called me recently to say that they’re fighting daily with their spouse and fear they’re on the brink of separating, that their child is present during arguments and is crying and getting distressed and that they have no support from friends or family nearby.

The dilemma:

They’ve now asked to borrow a significant amount of money from me to pay for some essential works on the house - apparently they miscalculated how much money they had in their savings account to pay for the work and don’t want to tell their spouse as they fear that will end the relationship for good. I obviously don’t want this to happen but it’s not small change they’re asking for - it would have an impact on my safety net and savings for the future especially if they didn’t pay me back. I discussed the situation with my dad who suggested we split the amount between us, with my sibling prioritising paying me back and my dad treating his as a gift. This would be more comfortable and I don’t need that amount of money immediately so I was ok with doing this, however on reflection I’m a little worried as I recall my sibling borrowed money from my mum on several occasions in the past and I don’t think they always paid her back. She actually spent way beyond her means on my siblings wedding and racked up a pretty big debt which we only uncovered after her death. They didn’t make her do this, but I think the expectation to contribute was always there.

I want to help them and I’d like to think they would help me out if I was ever in a difficult situation, but I can’t help feeling uneasy at lending such a large sum when a) I’m about to make the biggest purchase of my life b) it involves concealing financial matters from the rest of the family (only my dad, my partner and I know) and c) their track record with borrowing isn’t that great. I’m already stressed about mine and my partners future without adding money worries with family into the mix, but I think I’d be even more worried if I didn’t help them out. They’ve told me they can pay me back monthly but if this didn’t happen it’d just make me really sad. I discussed this with my partner who said they’d support my decision but they’re obviously concerned it might affect the relationship and they’re quite rightly wondering where my siblings’ share of the money has gone. 

Any thoughts, experiences, advice? Part of me thinks that if you have the money you should help friends and family out, but common opinion seems to be to only lend money out that you don’t mind not getting back. I could deal with not getting my share back but I couldn’t deal with the mistrust and sadness that came with that especially considering we’ve already suffered such a huge loss in the family. 

Put your partner before your sibling. If they have good jobs, they could get a loan, Their mismanagement of an equal share of your mother's money is not your problem.

My maternal uncle blew his half-share of his mother's estate, ran up debts and then demanded that his brother in law lend him money. Pa refused, but he got him into a debt programme which sorted my uncle eventually. It caused a lot of bad feeling between brother and sister and brother-in-laws, even so. 

I'm shocked tht you would put your well off sibling before your partner, despite a rough year. He could be really hurt. 

What if sibling is lying to you, thinking you're soft-hearted ? He might have massive debts. 

DON'T  touch this with a bargepole, or you will only have yourself to blame, if he doesn't pay it back and you lose the dream of having your first home. 

getmore4less

having reviewed the further posts I think I would upgrade NO to FO.

Jude57

It's unusual to find unanimous agreement here, and I'll add myself to the 'no' camp.  In a former life I was a finance manager (very senior, responsible position etc ) and never came across such a condition of employment. Unless cleverly worded, it could be unenforceable; mortgage, secured home improvement loan, car finance are all loans, as already pointed out. The regular credit checks are absolutely a thing, though and high levels of unsecured borrowing will raise concerns.

In a slightly more recent previous life I was a debt adviser for over a decade, and heard a variation of this scenario pretty much every day: spouses, one excellent with money but stressed and busy, the other spouse useless with money but takes on management of household finance, makes poor financial decisions. Add overspending, keeping up with the Jones's and a feeling that as they both work hard and earn well, they are 'entitled' to live well. At some point the overspending comes to light and causes tension, promises are made and things calm down but if real changes aren't made it becomes a cycle.

 It's my view that your sibling hasn't miscalculated their savings at all. I think they've run out of available credit options and know that they would only (perhaps) be able to borrow from sources not reporting to credit reference agencies.

gizmo111

I'd save the money to support your sibling with the inevitable divorce costs.......something is very wrong with their explanation for needing the money and costs of new windows.

boldaslove

elsien said:

A mortgage is a loan. I presume his name is on the mortgage - how does that fit in with the terms of his contract?

Someone who is in senior finance may have queries raised if they are taking out loans because they are in debt and can't manage their finances, in the same way that bankruptcy etc rules you out of some jobs but (and am no expert) I can't envisage a contract giving a blanket ban.
However there is one easy way to check for sure  - ask to see the specific contract term.

I still wouldn't lend to them, but it might help your dad in his decision. 

We did a bit of digging and actually found the documentation for this and it is sort of true - they can take out loans etc but they have to be from providers that aren’t associated with the company my in-law works for and everything has to be declared. Again, this is all boiling down to a conversation being needed between them! My in-law is highly successful in their field, they will KNOW very quickly if something is amiss financially and if we’re all in on it they would quite rightly be upset with us all.

calleyw said:

Not sure why you felt the need to drag your partner in to it. Even if was to deflect to give you time to make a decision.  

Because I respect my partners’ opinion and we’re also about to buy a house together so we need to be aware of any major financial commitments the other has. If I had decided to lend this money to my sibling it would alter the plans my partner and I had discussed about our future finances. I understand where you’re coming from with that statement but there’s no way I’d keep this from them.

Sea_Shell

Have you definitely decided not to loan now, or are you* still chewing it over?


* You and your partner.  I agree they should be fully involved.