Borrowing from friends and family
Cheaper repayments - but beware of the pitfalls
Borrowing money from friends or family can be tricky if you are still in financial difficulties when it comes to having to pay it back. To avoid the emotional strain on the relationship you need to be totally honest and upfront about the situation.
What did you agree to originally? Was there a legal agreement in place concerning repayment? As soon as you know there is going to be a problem with making payments, let them know. Most lenders would prefer to know in advance that there is a problem, rather than just have it sprung on them.
Remember that the money you borrowed may have an impact on them as well. They could have budgeted for the money to be returned over time, so it is important to work out how you can honour the agreement. They may agree to accept the money at a later date. They may even be prepared to accept a small sum of money each month or over a fixed period of time.
One possible way to do this is putting money into the person’s bank account on a regular basis by direct debit. Just inform your bank of their details and it will happen automatically.
When in debt to friends and family, you ought to consider how your behaviour is perceived by them. If you are seen spending wildly, this may not be appreciated. After all, you owe them money and if they see you spending on what they see as unnecessary products or services it could damage your relationship with them.
If you borrow from friends and family but fail to pay them back, you could lose their friendship and support – which should mean much more to you than the sum borrowed in the first place.
IVA's
The IVA Guide
Money Advice Direct has put together an IVA Guide based on the enquiries and questions that we receive at our helpline offices.
In the guide we cover such subjects as IVA Approval, early settlment of your IVA, missed IVA payments, IVA failure, additional debt claims and much more.
[click here for IVA Guide]
What is an IVA?
The IVA is an extremely powerful tool enabling you to clear your debt and return to a clean financial bill of health. Visit Money Advice Direct's Guide to Individual Voluntary Arrangements (IVAs).
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DANGER
Due to the tremendous demand for debt consolidation services the United Kingdom is now overloaded with debt management companies that contain misleading information. [more...]