Category: advice

Loans: What to Do When Friends and Relatives Do Not Pay Back

One consequence of the current economic crisis is that credit is increasingly difficult to obtain bank loans. That and the fact that bank loans can be expensive, we will probably see an increase in informal loan offered to friends and family. Generally, it is still considered an option of last resort, because of its potential for a relationship of strain values.

It is particularly associated with danger, since it is common for people who ask to borrow money are likely to do so because they had financial difficulties and perhaps because they have transformed into a loan from a bank.

What do we do if we have lent money without the other person fails to pay the money? One of the problems from person to person lending is that it is almost always informal in nature, without written contract, and often no agreement on the repayment schedule. This means that the lender really does not justice (or would be very difficult to assert any legal rights) should be the other person does not repay the money. You are therefore relying on the trust that exists in your relationship, but as good as the confidence in May, in May, there were mitigating circumstances which means that the other person can not pay the money.

When the lender, you have several options should you find yourself in this situation undesirable. The first is simply to recoup the money and put it as a painful experience. You can take this option if the amount is relatively low (at least from your point of view) and / or you do not want the issue to fall into a bad argument that can destroy a relationship that you enjoy. For example, if you loaned money to your younger brothers and sisters. You must clearly state that you are not satisfied with the result and that will be more money. It is hoped that the other person might be ashamed of the effort to repay the money even if you said that you’re ready to write.

A second option is to talk to your friend about why it is difficult to make repayments and offers flexibility in payment shall be made or the amount that you are awaiting the first installment. Open and honest communication is the key here, and it is important to try to stay calm. Rising tensions and accusations do tend to make things worse. To understand the perspective of the other person can help make it possible for you to come to an agreement that will reduce the financial loss to you. That is essentially what the banks when the borrower is in difficulty in a loan.

The third option is to invest in an aggressive and demand that the other person pays all the culprits and do so within a specified period. If you use this method depends on how you know the other person and to what extent you think that this approach is likely to be. You must keep in mind that May affect your friendship, but it is hoped that some short-term friction May be better than leaving the festivities to a lot of more putrid.

In general, personal loans is a risky and often provide a great deal of inconvenience and suffering for very little reward. That is why we chose to take loans from banks. This does not mean that sometimes there are circumstances where you will find in May, it is lending money. But like a bank must be diligent when offering a loan, you must have thought long and hard about the benefits of lending by your friend or family member for money.