Family Member Owes Money. Advice?

[StarMan]

Hi all. I'm in a bit of a pickle and thought you wonderful people might be able to help me out.

Mid 2010 my Mum informed me my younger brother and his partner were having financial difficulties and that he was going to ask for some help. So, after being warned by Mum and 'encouraged' to help out my brother came to me. I asked what it would take and we came to $5000. I didn't feel entirely comfortable with this (first mistake), as it was a substantial chunk of my savings. However, I was *assured* that I would be paid back by the end of the year (they had money due from other sources was the story at the time).

So as I saw it, this money would be absent from my account for a few months and then back before I knew it. I agreed and lent him the money.

Now, recall I said mid 2010. Heh. Obviously things did not go as planned.

I have, to date, received approx $1000 of the $5000 owed, as a result of a couple of cash payments and an automatic payment he set up last year. At the current rate, I'm looking at another 3-4 years. As for my 2nd mistake, we never drew anything up on paper.

So, you might be asking yourself, how did I let it get to this? Really, this ought to have been addressed as soon as the money wasn't through as agreed. I was told after the time expired there had been complications and other 'things' which had never been elaborated on.

A quiet resentment has grown over the past couple of years, punctuated with me venting to both my parents on the situation. They're hardly scraping it at the bottom of the social ladder, with trips away, 2 kids looked after, a business and a house.

I am not in desperate need of the money back, however, I have become increasingly aware of the *loss* I have incurred by not having it in my savings. This would have been a non issue if the loan had only been issued for the few months I had agreed to. However, protracted over several years, this will add up to close to a grand lost in interest.

LOL, so I finally broached the subject with him. I had the idea that to compensate for this, rather than start charging interest, they could provide a service instead. I thought his partner, being a great hairdresser with her own barber shop, could provide me free haircuts and some product over the next couple of years and he could continue paying me back at the less-than-stellar rate that he has.

Well, it went down like a cup of cold sick. I discovered he was incensed by my 'offer' and that I'm his brother, not a bank. Family helps each other out! Basically, the notion of me thinking about interest (see: money I'm losing by not having the loaned money in my possession) isn't above board.

I was blown away. I really thought my offer was generous (overly, now). Something has switched in my mind and I've gone cold on both of them. I can't stomach this loan anymore and I want the lot back. This has been hanging around for years longer than I intended and when I finally addressed my concerns, I'm the one who upset*him* ???

This will be a lesson well learned for the future, but what do I do in the present? My mother wants to stay out of it and my father thinks because interest wasn't agreed to initially, I shouldn't demand it now. Well, I didn't agree to loaning him money over a several year friggin' period! I haven't got anything on paper. We had a verbal agreement that was predicated on me being paid back by a particular time, is all. As that condition was not met I don't see why I'm being unreasonable by suggesting additional conditions (interest) if the net result for me loaning them money is a loss of several hundred dollars. Free legal aid? Collection agency LOL (and what would THAT cost me)?

Ugh. End of rant. Not expecting any magical answers. Just had to get it off my chest and tell someone aside from my parents.

 

[Amaris]

You got shafted. You're lucky you got the $1000 that you did get back. I wouldn't expect anymore, and without any kind of contract or solid proof, you're at his mercy. Considering he was incensed at the idea of small ways to compensate you for borrowing so much and causing you financial loss for his tardiness, you're pretty much up shit creek. When family members pull the "we're family, we help each other out" line, they've no intention of paying you back, and may even ask for more in the future. Sorry for your losses. Seriously.

As a rule, I don't lend money. If I give a family member money, it's a gift and I expect no repayment (the amounts are always small). In the future, do not, under any circumstances, loan family money. If people have a problem with that, point them to your brother as the fine example why.

 

[Captain_Nick]

Judge Judy.

 

[Melakon]

Talk to a lawyer (ask if they'll take a first visit without a fee) and see if you have a case.

When I was waiting for an insurance settlement after an accident, a sister pretty much supported me for over a year covering an apartment and grocery money. We had no written document. When I finally got the settlement money, I asked her to give me a dollar amount to settle things. I thought her number was too low ($6000) so I repaid her based on my calculations ($8000). I gave another relative $2000, unasked, to repay for assistance in the same period.

 

[The Lensman]

Sorry to hear about that and yeah, it sucks. It was probably a mistake to talk about interest rather than just getting the original amount back. I'd probably recommend talking to him about a payment plan on just getting the original amount repaid. At this point you're looking at either a slow repayment or nothing as J. Allen noted.

You may not have gotten anything down on paper initially, but you may be able to work out on paper a plan to repay, and in that way get some sort of paper trail about what is owed. Maybe 50 bucks a paycheck, which would be 100 a month. You're looking at four years, and you'll take a hit on interest you could've had, but at least it's better than nothing.

So you put on paper the amount loaned, the 1000 paid back, and the difference owed. Determine what's affordable, a workable time frame, some sort of ledger to keep track of payments made and get him to sign it. At this point you've got nothing to lose. Just stay calm, and let him know you're willing to work with him on repayment, but you've got to have repayment. Especially if they have jobs and are not struggling.

 

[Sigokat]

Sorry for your troubles. Been in your situation as well, but I never saw a dime of the money that I loaned. People always say they will pay you back, but the way I see it now (at least with my friends/family) is if they don't have the money now, hence needing "help" what makes them/me think they'll have the money to pay me back when the time comes.

I think the most I loaned out was $500.00 so a lot less than you did, so I sucked it up as a foolhearty errand on my part. Is that person still a friend...yeah kind of...even though she doesn't listen to any advice and is in a worse situation now then when I loaned her money all those years ago.

But I made a vow that I am never loaning money ever again. I made myself into what I am through hardwork and determination. Both my degrees I've paid for on my own, so the way I see it is I can do it then so can they. Maybe I'll lose family/friends over it if it ever comes up again, but that's something I'm willing to accept.

Good luck with your situation. Hope you get your money back or at least some peace of mind.

 

[Alidar Jarok]

I know everyone is saying talk to a lawyer. That may be required, but you also want to consider whether you want to sue a family member. That's usually not something that ends well (on the other hand, such a substantial loan doesn't usually end well either). You are right about the interest. It's not profit, it's a loss of what you could have had otherwise. Just through inflation, the money you get back is less than what you loaned in the first place.

My memory of Contract law is a bit fuzzy. If you did talk to a lawyer, the biggest thing to find out about is whether the statute of frauds applies (the rule that contracts lasting more than a year have to be in writing). I think you're OK because the contract wasn't guaranteed to last more than a year, it's just an indefinite contract. Proving the contract won't actually be that hard since several family members seem to know of its existence. Although, once again, do you want your whole family involved in a lawsuit against a family member? Also, since there's no repayment date, I wonder if he's even actually breached.

This is an unfortunate situation to be in. But it is worth asking if it's worth the problems associated with fighting to get repaid sooner. As long as you are still getting repaid, it's better than nothing.

 

[Use of Time]

I agree about leaving out the lawyer. It sounds like Starman would still like to have a relationship with the younger brother. If you go to court that is probably the end of that relationship. Maybe you could amend things by agreeing on a realistic payment that would help soften the financial blow while simultaneously restrenghening your relationship with your brother? Something like "Hey I know getting back that remaining 4,000 is probably not likely at this point but maybe we could agree on getting me 2,000 and just chalk it up as a lesson learned." Just a thought, but it all depends on how much you want or need that remaining money versus how much you value your relationship with your brother.

Regardless, I am sorry to hear about the situation you are in. It is harder than people think to turn down family members in need.

 

[BillJ]

You're boned. Write it off as a loss and lesson learned and move on.

 

[Robert Maxwell]

You're boned. Write it off as a loss and lesson learned and move on.

Pretty much.

You can either negotiate an agreement that has no legal force behind it (take what you can get), consider it a loss, or sue. There aren't really any other options here, and if you want a good relationship with your brother in the future, either sticking with the current agreement (or a similar one) or forgetting about it are your only choices.

I never "lend" anyone money that I intend on getting back, because most of the time you're simply not getting paid back, and it's just charity.

 

[Scout101]

Given the situation, seems that your mother is an ass. From what you said, she's in a pretty good spot financially, whereas this was a substantial portion of your savings, yet she sent him to YOU rather than deal with it herself. And set you up to fail. She drove the whole deal, but now just wants to stay out of it? Then why'd she push you into it? Especially if she could afford it herself.

You're getting used by both sides here. Said you have some sort of automatic repayment plan, personally if that's still ongoing, I'd just leave it alone and hope it eventually pays itself off. Pretty clear you aren't getting it any faster, nor are you getting any thanks/gratitude/compensation.

You don't lend money to friends/family, not if you have any expectations of getting it back. And you're certainly not getting any interest/benefits over it.

And not sure where you're investing your money, but there's no way you missed out on $1,000 in interest by not having $5k in your account for 3 years. That's a crazy return on investment in this environment without some serious luck (steady 6%), and savings accounts don't pay jack in interest anymore. And you got SOME of the $5k back, so can't even count the full amount. Don't make it worse by imagining some crazy amount of loss you're incurring; the loss is pretty much limited to what you gave out, plus maybe a couple hundred bucks in interest max, assuming good return...

 

[auntiehill]

^This.

Really, you're better off just letting it go and counting it as an expensive lesson learned. You never, ever LOAN money to friends and relatives; you GIVE it and expect to never see it again. If you happen to get repaid, it's a pleasant surprise.

This festering resentment is not going to do you any good; it will eventually explode and you'll end up with far fewer people around that will want to help you out, should you ever far on hard times. Let it go and remember to never loan out what you can't afford or aren't willing to completely surrender.

 

[ALF]

Really, you're better off just letting it go and counting it as an expensive lesson learned. You never, ever LOAN money to friends and relatives; you GIVE it and expect to never see it again. If you happen to get repaid, it's a pleasant surprise.

I like that idea. It's great advice I got long ago.
Offer to give 10% of whatever is asked and don't expect it back. This usually chases off the person asking for the loan but if it doesn't at least you can close the door on it forever.
"Hey, I really need $100, I can pay you back next week."
"Tell you what. Here's $10 you can have and good luck to you."

I've forgotten some loans from my past that aren't ever being repaid (generally pretty minor ones a few 100's of $$$) and I sleep well at night.
There are *no* solid repayment assurances from anyone. The moment your money is gone, it's gone.

Somehow I'm reminded of the episode of the Sopranos where Artie tries to get his loan back from the goon who was running the crooked wine startup. In the end, of course, you need a guy like Tony on your side to collect!

 

[Kirby]

Personally at this point I'd just tell my brother that he needs to consider the remaining balance as a gift and do your best to let it go. Family is more important than money, and you can always get more money, but destroying your relationship with your brother is a tough thing to do. I would also make it absolutely clear that you will never, ever loan money to him again.

 

[Relayer1]

Given the situation, seems that your mother is an ass. From what you said, she's in a pretty good spot financially, whereas this was a substantial portion of your savings, yet she sent him to YOU rather than deal with it herself. And set you up to fail. She drove the whole deal, but now just wants to stay out of it? Then why'd she push you into it? Especially if she could afford it herself.

You're getting used by both sides here. Said you have some sort of automatic repayment plan, personally if that's still ongoing, I'd just leave it alone and hope it eventually pays itself off. Pretty clear you aren't getting it any faster, nor are you getting any thanks/gratitude/compensation.

You don't lend money to friends/family, not if you have any expectations of getting it back. And you're certainly not getting any interest/benefits over it.

And not sure where you're investing your money, but there's no way you missed out on $1,000 in interest by not having $5k in your account for 3 years. That's a crazy return on investment in this environment without some serious luck (steady 6%), and savings accounts don't pay jack in interest anymore. And you got SOME of the $5k back, so can't even count the full amount. Don't make it worse by imagining some crazy amount of loss you're incurring; the loss is pretty much limited to what you gave out, plus maybe a couple hundred bucks in interest max, assuming good return...

Yes, this about covers it. The haircut thing was asking for trouble...

 

[Miss Chicken]

And not sure where you're investing your money, but there's no way you missed out on $1,000 in interest by not having $5k in your account for 3 years. That's a crazy return on investment in this environment without some serious luck (steady 6%), and savings accounts don't pay jack in interest anymore. And you got SOME of the $5k back, so can't even count the full amount. Don't make it worse by imagining some crazy amount of loss you're incurring; the loss is pretty much limited to what you gave out, plus maybe a couple hundred bucks in interest max, assuming good return...

i am not so sure that it is so crazy. StarMan is from New Zealand and I assume that New Zealand interest rates are similar to Australia's. In 2011 I opened up a 60 month fixed term deposit and got a 6% interest rate (interest is paid to me yearly). When I open up the account my banker told me I was unfortunate - two months before the interest rate was at 6.8%. At the same time I also opened up a 12 month fixed term deposit with. 5.3% interrst rate - so it is highly probable that StarMan could have got an interest rate of around 6% or slightly more in 2010 for a three year fix term deposit of $5000.


Edited to add - I looked up current interest rates in Australia and New Zealand and found them similar, currently around 4.5% on fixed term deposits and between about 2 and 4.5% for savings accounts depending on the type of savings account. I get the higher rate on one saving account because I deposit a minimum of $50 a month and don't withdraw (if I withdraw I lose my interest for that month).

 

[Lindley]

Geez, maybe I need an New Zealand bank.....here in the US you're lucky to crack 1%.

 

[Trekker4747]

I personally never loan people money and expect it back, it creates too much turmoil for both sides.

It's a bit dickish on his part, sure, but he's family and needed the money. Get back what you can, as you get it, and consider that a bonus.

 

[Miss Chicken]

Geez, maybe I need an New Zealand bank.....here in the US you're lucky to crack 1%.

The downside of it is that high interest rates on investments means high interest rate on house loans. This isn't bad for me as I am not buying a house. Whenever rates come down home buyers cheer and I groan.

 

[propita]

I loaned my brother $1000 years ago, after he borrowed and repaid a $2500 loan. It took well over five years to get the money back. He said, "Since you stopped asking about it, I figured I must have paid you and forgot." Um...no. He also borrowed money from our 78yo limited-income widowed mother, as did my sister.

When we all received some money from an inheritance, all debts were paid between parties. Finally.

And, no, I would not lend my siblings money. I've rather soured on family. I wish my siblings well, but after all the crap I put up with growing up and continuing to this day, I wouldn't miss them if I never saw or heard from them again. They don't want to be a part of my life (unless there's something in it for them, of course)? Fine by me.