20 year debt with family plus interest

ButterflyZ

Hi All,
im looking for some advice about a never ending loan I’ve had with a family member. I’ve borrowed and paid back over the years and my debt is now at around 30,000. They’re charging me £200 a month interest and I can only afford at the moment about £350. Making this never ending debt drown me. I have not borrowed in over a year as my circumstances have changed. Although I am grateful to this close family member for lending me this, I also believe they shouldn’t have done as I have never been in a position to realistically pay it back. 

I am looking for a way out, with zero / low interest instead of £200 a month (which goes as the debt goes up and visa versa).  

Any suggestions / support please 

Devongardener

Do you have a written and signed loan agreement, stating the repayment terms?

ButterflyZ

No, it’s all just in good will 

DE_612183

Is there anything in writing?

How close are you to this family member?

For a family member to be charging you 8% is not that great.

That current debt will take you 7 years to pay off if no interest.

I'd have to have an open conversation with them about the stress it's causing you - and suggest you pay £350 a month with no interest for as long as it takes to get into a position where you can pay more, and then perhaps you can pay interest.

You may need to point out that if you have to go bankrupt or fall ill due to the stress they will lose the whole 30k.

ButterflyZ

DE_612183 said:

Is there anything in writing?

How close are you to this family member?

For a family member to be charging you 8% is not that great.

That current debt will take you 7 years to pay off if no interest.

I'd have to have an open conversation with them about the stress it's causing you - and suggest you pay £350 a month with no interest for as long as it takes to get into a position where you can pay more, and then perhaps you can pay interest.

You may need to point out that if you have to go bankrupt or fall ill due to the stress they will lose the whole 30k.

No there’s nothing legal in writing as it’s been a debt I’ve had for 20years. It’s with a parent. 

DE_612183

that parent is putting a loan shark out of business.

ButterflyZ

DE_612183 said:

that parent is putting a loan shark out of business.

I have to agree. However, I need to fix the situation. 

Any suggestions on how to clear it minus interest and I can present to the table as a solution?

Sea_Shell

Talk to them and explain your situation.

If they agreed to lend you that much, they must be close family and so assume care about you.*

If you can't repay, it may be the last loan you get from them, so you'd need to ensure you won't need them again in the future.

With nothing in writing, you could just stop paying!  But that would probably damage your relationship.   They could take you to court, but they can't get blood out of a stone, if you don't have it.

You don't have any comeback about "responsible lending" with family.   

Only you know the true picture of your family relationships where money is concerned.


* Unless you're related to a "loanshark", who was just out to make a profit.

Mark_d

I think it all depends on your relationship with this family member and the conversations you've had with them. However I do feel that £200 a month interest is pretty steep for a loan to a family member.  By my calculation that is 8%.  No wonder the debt is never ending.
If a family member of mine needed help, I would give them advice and non-financial help but I would never saddle them with lifelong debt.

It sounds like your family member has saved you from immediate drowning...only so that you can suffer a very long and drawn-out drowning.

If I were you I'd talk to the family member and explain that you are grateful for the help they gave you but it is only fair and realistic that the loan is repaid without interest.

Slinky

I wonder if the family member actually realises just what a high percentage that £200 is.  They might be mortified if they knew. Or maybe not. The lower the debt goes, the worse that percentage is.

(As an aside, should the 'interest' be declared and taxable?)

christineperseus

Slinky said:

I wonder if the family member actually realises just what a high percentage that £200 is.  They might be mortified if they knew. Or maybe not. The lower the debt goes, the worse that percentage is.

(As an aside, should the 'interest' be declared and taxable?)

Absolutely!