Lending money to family

Auti

I dont think you would be helping them as they will not learn to manage their money properly and just see you as a money pot. I think far better to help them face their creditors and work out a payment plan to clear their debt then they will understand how to manage money - you could also help them make sure they are claiming any benefits they are entitle to. Perhaps they could downsize something eg car or sell something to help pay off creditors - also look at outgoings each month as some may be like but not need. £3000 is not a huge debt to clear so by helping them to find their own solution you will be helping them to learn and become money aware. Please dont lend as they will not learn as shown by his bad credit rating. Take care 

XzavierWalnut

I would not do it. Many years ago I got a bank loan out for my mother so she could pay off some store cards. 
She paid me back by reducing the money I used to give her for lodgings etc. each month.
When I moved out of the house to live with my now wife, my mother said she could not afford to pay me back.
I have had much more money than that from her over the years, but at the time I was not a big earner and was starting a new life, so it was an issue.

Sea_Shell

OP, what lessons did you learn after "lending" £200 to your Ex. ?

Emmia

Do you know why they owe the £3k? Is it a case of a short term cashflow problem, unexpected expenditure  - i.e. the boiler went bang the week they lost their  job, and it took them a few months to find employment, but in the meantime.... Or is it a case of living beyond their means generally, or as a result of gambling etc.

Either way, in lending them the money to consolidate, you may do them no favours. If their debts get paid off (in full or part) with the £3k, but they don't shut the credit cards etc., and their spending carries on as before / the cause of the debt is not addressed then they could effectively double their debt almost overnight.  

They'd owe you £3k and another £3k on the cards... £6k in total.

Would you gift the £3k, happy to never be repaid?

I think you'd probably be better pointing them in the direction of this site, to help them dig themselves out of their mess.

Pollycat

Can you afford to write off £3k?
If you can't, say 'no'.
I loaned my closest family member much more than that.
It wasn't to service a debt, much more important than that.
I could afford to lose that money but it was repayed in full over the agreed term.
Reading through your earlier thread, does this family member see you as an easy touch?

gwynlas

If they only want to borrow £3000 then they are not in that much debt and should be able to manage repayments themselves unless they are being charged extortionate rates of interest. If you can afford to potentially lose this amount then lend it to them with a written schedule of repayments. If they default then you can either issue a small claim through the courts or write it off to experience vowing to never loan money again.

Marvel1

Can you afford to lose it, if it he doesn't pay it back?

TBagpuss

The fact that he has bad credit is a red flag - if he has been unable to manage his debts to the extent it has affected his credit record, what has changed to make you think he would be able to manage to pay you back? How confident would you be that he would in fact clear the debt and then make the payments to you? 
Can you afford it, financially, if he didn't pay you back (i.e. can you afford to lose the £3,000)?
How would it affect your relationship if he borrowed the money and failed to repay you? 

He's always likely to see money borrowed from a family member as a lower priority than any other debts, as it's less likely that you would sue him or hat not paying you would affect his credit. 

It's a high risk and as well as the risk of his not repaying you, there is a risk it could damage the relationship, either way. If he fails to repay, you will, understandably, be upset and that's likely to damage the relationship, however, if he pays you back but he struggles or if he asks for extra time / a payment holiday then that could lead to resentment - yours if you agree, his if you don't.

Also - how close a relative is he? Unless he is your own parent or child, why is he asking you rather than other, closer family members? 

I'd only lend him the money if :  - 

- You could afford to lose it if he doesn't repay you, or doesn't repay you in the agreed timescale
- You are satisfied that his current debt and poor credit are out of character - e.g. if they have come about due to a relationship breakdown or other one-off event , and he is normally good with managing his money and is now managing his outgoings , including any planned payments to you, well - ask him to let you see his budget showing income and outgoings 
- you know and trust him enough to be very confident that he will use the money as he says, i.e. that he will be paying off the more expensive debt 
- you agree, in writing, all of the details including the timescale for him to repay you, so in a a worst case scenario you have some hope of getting your money back

Emmia

gwynlas said:

If they only want to borrow £3000 then they are not in that much debt and should be able to manage repayments themselves unless they are being charged extortionate rates of interest. If you can afford to potentially lose this amount then lend it to them with a written schedule of repayments. If they default then you can either issue a small claim through the courts or write it off to experience vowing to never loan money again.

Does the £3k clear the debt, or just deal with immediate demands?

MEM62

Gam2015 said:

I have been asked to borrow lend about 3k to a family member with bad credit he is wanting to consolidate his debts into one payment he can’t get a loan out because he has bad credit he says he will pay me back every month. What are peoples thoughts on this? 

So mainstream financial institutions have assessed him and decided that he is a bad risk and they do not want to lend to him as he is unlikely to pray his debt.  These guys are experts at assessing these risks.  What makes you think you know better?

Lend him the money and it's gone. That is all there is too it.