The “Friend-Lend”

February 21, 2019

• Insolvency News

Beware of the friend-lend, that’s where you lend money directly or indirectly (through use of a credit card or access to a line of credit) to one of your besties, or relatives.  Well they were your bestie when you lent the money but when you try to collect things might just go pear shaped.

Now, don’t get paranoid, I’m not suggesting that can’t trust anyone but you do need to be cautious with the friend-lend because too often things don’t work out and not only do you end up losing money, but you also might lose your friendship.

My office has seen many cases, over the years, of friends or relatives allowing the use of their credit cards, lending money directly or indirectly, by obtaining loans or lines of credit for the other person, only for that individual to find they can’t maintain payments and end up filing a bankruptcy or a proposal and including that debt.

If someone doesn’t qualify to borrow money on the strength of their own credit rating lending them money will be a risky proposition.  To protect yourself, you should assume that you have “given” the money to your friend and don’t treat it as a loan, if they do repay you that’s good, but if not, you won’t be disappointed.