Should I Ask for a Loan from My Family to Pay Off My Debts?
Debt has always had a high degree of shame attached to it (real or
perceived). Admitting to having debt problems is like saying that
you’re not experienced or knowledgeable enough to handle the real
world.
To make matters worse, you find out that unless you get immediate
financial help you will lose your family home, the car you need for
work, your business etc. You have been offered a loan at a very high
interest rate and you are desperate. Do you take the expensive loan
or ask your family for help?
Firstly, (and I make no excuses at repeating this in these articles)
are you serious about getting out of debt? If you are, you can
consider your family as an option. If you are not serious about
getting out of debt and you just want some ‘breathing space’, you
risk losing your family’s support and their money!
on Debt Management and
Bankruptcy
Our advisors will be happy to
give you free debt advice about how you can manage your
debts
Asking relatives or friends for financial help is a
tough decision, but can be the best option (at least for
you). In most circumstances, a loan from such sources
would be interest free, although I have known of cases
where a token interest is paid if only to impress upon
the borrower the gravity of the situation. It should be
remembered that the money loaned to you was probably
earning interest, and in some cases part of the yearly
income of our parents.
If your debts are that highs that a second mortgage
would have to be taken out by say, your parents, you
need to have a 'cast iron' repayment plan. If you have
any doubts about your future ability to meet the
payments you must not put your problems before the
possible problem you may drop on others (life-long homes
have been lost, a more common scenario than you may
think).
The amount of repayment is an important factor. If you
have the opportunity to take an interest free loan, you
should also take the opportunity to repay the loan at a
rate you can maintain at 101% (this is crucial as
falling behind with this type of loan can affect all of
your family, and can cause wide and irreparable damage).
Repayment of loans from people close to you is normally
enough to regain your position in your family, and life.
Take your friends or family out for a meal when you
finally pay off the loan. This will be enough repayment
to those that care about you but do not pay by credit
card!
