Collecting money from a family member

[maat55]

Tough spot to be in.. so many factors play into this. Is the sibling young and any chance they will mature and realize their debt is hurting you?

If you are not on speaking terms, is this a temporary thing or you think the relationship is shot?

Is there any other family members that you can recruit to help you talk to the sibling?

Family is important and you are obviously torn about stirring the pot again. Was the "not on speaking terms" initiated on their part or yours?

Maybe you can reach out to them and try to help them repay you. By this I mean, rather than demand all of the money, maybe a payment plan will work. Can they afford even just 200 per month. Will be a long term repayment, but at least you will not be out all of the money.

And if you can do this.. do it with kindness and also get the repayment terms in writing, “BillyBob agrees to repay the loan amount of x over the course of x term for x amount per month”. This way you have in writing that there was a loan and there is no mistake about the repayment terms down the road.

Good luck

In most cases, when a family member wishes to borrow money from another family member, it's because they couldn't get the money from a bank, or they felt they would be turned down. In either case, they are a financial risk. You should no more lend money to a family member than a bum on the street.

If a family member or friend is in dire straits due to circumstances beyond their controll, you can give them money and if they wish to pay you back, fine. But in many cases, they may have made choices that got them where they are by their own fault, such as buying things they don't need and not saving an EF.

[geojen]

well, like I said before.. it is all in the way you present it. Help them find a way to repay you, lay a little guilt on the situation. "Lil Bobby needs braces this year and Jim and I had a huge fight about where we would get the money... blah blah blah"

Make it sound as if they are helping you out by repaying the funds. "It would really be a big help to us if we set up a payment plan".

If they are a decent person, they will do the right thing. If they are not a decent person... don't go out of your way to enable their actions.

If push comes to shove... shame is a great motivator. At the next family picinic let it slip to the chatty kathy of the bunch.. "BillyBob must be down and out because he has not been able to repay any of the 10k he borrowed from us". Once a family rumor sets in.. it will either motivate them to approach you to settle up and clear their name.. or it may even put the thought in others mind not to lend to BillyBob.

This may work. Family guilt is a great motivator in some families, but it will really depend on the family dynamic. It's worth a try, in any case.

No offense to all the posters, but this is one of the only replies that had actual advice in it, rather than "you shouldn't have done that." Obviously, the OP realizes this and probably won't do so again.

[Joan.of.the.Arch]

I think I gave real advice--a mediator. I also disagree with the rule of thumb that one should never lend money to family. I actually find pretty shocking the idea of withholding from family. I think one should go all out for family and be able to count on family to go all out for oneself--including by doing all possible to repay a loan. I cling to a Three Musketeers attitude about family.

[disneysteve]

I also disagree with the rule of thumb that one should never lend money to family. I actually find pretty shocking the idea of withholding from family.

I never said to withhold from family. I send not to lend. There is a big difference. If someone close to me was truly in need, I'd certainly GIVE them what I could to help out. It wouldn't be a loan. It would be a gift. If they chose to repay it in some way, that would be terrific (and I might or might not accept it). I think, in general, lending money is a recipe for trouble. Obviously there are exceptions, but as rules of thumb go, I think not lending money to friends and family is a good one.

[LivingAlmostLarge]

Lend = no. Give = yes.

Gotta be a gift because it's not coming back. I learned that the hard way. So it's a gift that is gone.

[F16]

I never said to withhold from family. I send not to lend. There is a big difference. If someone close to me was truly in need, I'd certainly GIVE them what I could to help out. It wouldn't be a loan. It would be a gift. If they chose to repay it in some way, that would be terrific (and I might or might not accept it). I think, in general, lending money is a recipe for trouble. Obviously there are exceptions, but as rules of thumb go, I think not lending money to friends and family is a good one.

Completely agree. Very good posting, Steve!

[mishi07]

Thats always a difficult thing to approach but from experience as it can be awkward and embarrassing for both parties.

I think I gave real advice--a mediator. I also disagree with the rule of thumb that one should never lend money to family. I actually find pretty shocking the idea of withholding from family.

I agree. Or something that doesn't require a face-to-face collection like email or voice message. If he/she takes time to reply then that when speaking would be best.

[cschin4]

Yes 10K is a lot of money. Sorry you are in this position. First, I personally would not loan money to relatives. I have given money to relatives and have made clear it was a gift with no repayment necessary or expected. If I cannot afford to make a gift of it or choose not to then I don't give them any money. There have been 3 occassions where we have given money to my BIL due to financial difficulties. However, he was recently in more financial difficulty and called to "borrow" money to pay his daughter's tuition. And, we had to say no to that one. We have our own children to think about and sorry but that was way too much money to part with. And, so his options were to bring his daughter home and and let her work a year (not a bad option), transfer to a cheaper school or borrow money from elsewhere which was what he managed to do.
ANyway, most likely the 10K will never be seen by you again and now the relationship will have a permanent blot. That is why I advise people never to loan to relatives as 9/10 times that is exactly what will happen and it will ruin the relationship.

[money2009]

I had to learn this the hard way as well. Now if a family member asks for money I simply look at it as a gift with no expectation of getting it back.

These scenarios can be quite discomforting to say the least and I'm sorry to hear that you had to go through one.

[DebbieL]

While it may work for the minority (in my opinion) I do think that lending to family is usually a write-off. I don't think you'll ever see your money again. I'm so sorry, but I think this was an expensive lesson.

[b4freedom]

Court. It's harsh, but sometimes family members need to be screamed at by someone like Judge Judy. But, even after the judgement, don't expect to see any money.