Loaning money to friends

[gregkl]

This all applies to family too.

Give it with no strings attached. If you get the money back one day, consider it a bonus. Or a gift back.

My son and FIL are still estranged due to a money "loan". Sad. It's not worth it. I would have rather seen my son do without than wreck a relationship.

And yes, I told my son not to do it.

Sorry about that Hoosierdood. I can only advise what I would do; walk away and hope one day, he will come around and try to repay you. Otherwise things could just get worse.

 

[drillsgt]

Thats because he doesn't have a 401k... If he had a 401k he would have taken the money out months ago when the trouble started...
Good Luck.....

Not necessarily, there are funds that you can't access, but usually a representative can tell you quickly whether that fund can be cashed out or borrowed on etc.

 

[Vigilant]

Not necessarily, there are funds that you can't access, but usually a representative can tell you quickly whether that fund can be cashed out or borrowed on etc.

Ive never seen a 401k that couldn’t be borrowed against for imminent eviction from housing. All the ones I’ve had, that exact reason was one of the ok reasons to pull money early?

 

[Clay Pigeon]

Ive never seen a 401k that couldn’t be borrowed against for imminent eviction from housing. All the ones I’ve had, that exact reason was one of the ok reasons to pull money early?

Exactly, if ones plan did tell you you cant borrow against if for any reason and one is going to lose his home.

Cash the 401K in....


And again....Someone who handles money so poorly, certainly doesn't have any supplemental pension....

 

[femurphy77]

This all applies to family too.

Give it with no strings attached. If you get the money back one day, consider it a bonus. Or a gift back.

My son and FIL are still estranged due to a money "loan". Sad. It's not worth it. I would have rather seen my son do without than wreck a relationship.

And yes, I told my son not to do it.

Sorry about that Hoosierdood. I can only advise what I would do; walk away and hope one day, he will come around and try to repay you. Otherwise things could just get worse.

Unfortunately this is true. Friends and family are typically better positioned to **** you because you give them your highest levels of trust. I've had this happen to me as well under different circumstances and for only $300 but still. . . .

And I'm guessing mo 401k exists. This is by definition one of the best reasons that you would tap a 401 and they say so in the fine print.

 

[HoughMade]

Friend said he needed just shy of 3k or his family (wife and 3 kids) were going to lose their house. He said he was tapping in to his 401k but it was going to take 3-5 days to get that processed. So I loaned him $3k with the agreement that he would repay the loan within 5 days. That was 3 weeks ago. Now he tells me that his 401k rejected his request.

If some said to me that they needed $3,000 or they will lose their house in less than 5 days, if that is true, i know one thing for certain- this problem has been going on for over a year. How do I know this? Once a foreclosure action is filed, it take close to a year to complete it and no lender files a foreclosure the day after the first payment is missed...or the second one.

If a rental, the timeline is a quicker, but it's still at least a few months.

In sum, what has your friend been doing in the past year to fix this? To be blunt, if he said this just came up from nowhere and he was blindsided, he is lying.

Sounds to me like the 401k administrator knows more about his money habits than you do.

 

[Route 45]

Damn. $3000, huh? Did he at least give you a shoulder massage or buy you dinner first?

 

[jkaetz]

Friends and family paying back loans does happen, but it is rare. My brother racked up a good bit of debt in college when he hit the wall the parents bailed him out and told him he would repay it. He started paying it back (slowly) as soon as he could.

That said I know there is a very small subset of people I would lend $ to and it gets even smaller as the amount increases.

 

[HoughMade]

There are exceptions to every rule, but the rule remains the same. Lose a job? Medical bills? etc. Sometimes people need help, but these should be both rare and temporary.

In general, there is a logical reason why a person needs to borrow money from friends and family, not a lending institution....and it's not because they make good money decisions.

 

[Hoosierdood]

Thing is, I can afford the $3000. Ya, it’s a good chunk of money, but I’m still going to be able to pay my bills and handle my responsibilities if he never pays me back. It sucks losing that kind of money, but I will survive.

The thing that chaps my ass the most is that he lied to me. This is a friend who has inconvenienced himself several times to help me out. He is someone who I trusted, and considered one of the most honest friends that I had. When he asked for help, he said the money was already being processed through his 401k. Now he is saying it was denied. He said he would pay me back within 5 days but now it’s been 3 weeks.

The money isn’t the issue with me. The dishonesty is.

 

[Hoosierdood]

As a side note... I did have him sign a contract, so if I need to take him to small claims, I have that on my side. Not sure what good small claims will do though.

 

[Bsubtown]

Give it to them. Gift =/= loan.

This is 100% spot on. Your friend can pay back a gift if they so desire and are able. But if a gift doesn't get repaid you don't feel like you were cheated or lied to.
My main piece of advice with this as in other things is don't do anything that you can't afford or put you in a bad financial spot.

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[Bsubtown]

Thing is, I can afford the $3000. Ya, it’s a good chunk of money, but I’m still going to be able to pay my bills and handle my responsibilities if he never pays me back. It sucks losing that kind of money, but I will survive.

The thing that chaps my ass the most is that he lied to me. This is a friend who has inconvenienced himself several times to help me out. He is someone who I trusted, and considered one of the most honest friends that I had. When he asked for help, he said the money was already being processed through his 401k. Now he is saying it was denied. He said he would pay me back within 5 days but now it’s been 3 weeks.

The money isn’t the issue with me. The dishonesty is.

Has your friend offered to show you the response from his 401k? Has he talked about alternative payment plans? it sounds like he's gone out of his way in the past for you and you were helping a buddy out of a bind. It could be that there is a reasonable and truthful explanation for all this. Of course, he might just be screwing you.

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[Hoosierdood]

I’m meeting him on Friday. We will be discussing all these points. He has mentioned using his tax return to pay me back. I’m not sure if I believe him, or if he is just prolonging the inevitable. I guess my main questions will be focused on the validity of his original claims, and then coming to a resolution.

Has your friend offered to show you the response from his 401k? Has he talked about alternative payment plans? it sounds like he's gone out of his way in the past for you and you were helping a buddy out of a bind. It could be that there is a reasonable and truthful explanation for all this. Of course, he might just be screwing you.

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[flyingsquirrel]

I won a judgement in small claims and they said Good Luck. You are #26 and there is no debtors prison in Indiana

 

[Dead Duck]

So no collateral. Is his wife cute?

 

[Cameramonkey]

So no collateral. Is his wife cute?

She's probably part of the problem. LOL

 

[WebSnyper]

Might be time to get some blow torches and some pliers

 

[bwframe]

She's probably part of the problem. LOL

Or all of it. She might be THE problem.

 

[Phase2]

I've loaned money to multiple friends. Only one has paid back in full. At this point, I consider it helping a friend and if I actually get it back, that is a plus.

I certainly understand the OPs message. Not everyone can deal with the hit and it can create a strain between the friends.