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Here is a common scenario: a friend asks you for money for the down paymenton a car and promises to pay you back as soon as he can. Being the loving and caring friend that you are, you immediately loanthe money, confident it will come back in due time. After all, youve known your friend for years and trust him, and you wouldnt expect any less.
But as the months go by, you still dont see a dime come back. You are nervous about asking for the money, but you really needit back. Yet, you dont want to harm the relationship.
So what do you do? How do you get your money back and maintain the friendship? Here are nine ways to deal with a friend or family member who wont pay you back.
Ways to Get Your Money Back from a Friend
1. Offer Gentle Reminders
2. Suggest a Payment Plan
3. Offer to Help Figure Out Finances
Try this approach out first, however. If your friend is horrible at housework and you trade for an hourly amount, you may not feel like you got your moneys worth which could leave lasting resentment in the relationship.
Alternatively, if he has an item that is roughly equivalent in value to what he owes, tell him youre willing to wipe out the debt if hes willing to part with the item.
5. Hold a Joint Garage Sale
If your friend or family member is unable to pay you back and is very tight on both money and time, ask him if they would donate some of their things towards a garage sale. The conditions would be that you get the entire profit, but they would be free of the debt. Its best if you first approve, and then take charge of pricing and selling the items, so you dont feel ripped off.
6. Get Collateral
7. Visit in Person
8. Have Them Pay for You
9. Gift It to Them
As for the gift, there is a slimpossibility you can deduct it on your taxes, but it depends on the scenario. The loan would need to be set up asand considered a true loan turned non-business bad debt. More than likely, you will not be able to count the gift as a tax deduction, but I recommend contacting the IRS or checking out their website. These sorts of gifts are closely scrutinized, and depending on the value of your gift, you could even end up owing gift tax. Gifts in excess of $13,000 are liable to be taxed and the donor is the one who pays this tax. Gifts for charitable contributions, for medical or educational expenses, to a political organization, or to your spouse are not assessed this tax.
Maintaining a Good Relationship
Loans can ultimately sour relationships, and many friends and families have fallen out over this issue. Here are some ways to deal with the relationship as you are attempting to get repaid.
1. Be Patient and Forgive
Try to be as understanding as possible. This person may not be as financially responsible as you and may need some guidance to pay you back. Use the situation as an opportunity to help your friend develop financial responsibility. Do your best to not get bitter over the money. If the person doesnt pay you back, let him know your frustrations, but ultimately forgive him and move on. In the end, it will save your relationship and keep you from being an angry person who lost a close friend.
2. Think About How Much Your Relationship Is Worth
3. You Can Only Control Yourself
You are only capable of controlling your own actions. If this person does not pay you back, that is on his shoulders and not yours. Dont let it bring you down or ruin your life. Ultimately, it is a learning experience for both sides.
It is often not a good idea to loan money to friends or family members. However, if youve already done the deed and find yourself dealing with it, make the best of the situation and use the tips above to try to get your money back and save the relationship. Chances are, your friend doesnt feel very good about the situation either, and if theyre avoiding you, thats probably why.
Help them help you is the message here. Have compassion, and whatever you do, dont condescend because they owe you money. Definitely deal with your ego if you think this position makes you better than they are. They will pick up on these feelings which could harm the relationship irreparably.
Have you loaned money to friends or family members? What was your experience like? Have they paid you back yet?
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Casey Slide lives with her husband and baby in Atlanta, GA. She graduated from the University of Florida in 2005 with a bachelors degree in Industrial Engineering and worked for a prominent hospital in Atlanta. With the birth of Caseys son in February 2010, she decided to become a stay-at-home mom. Caseys interests include reading, running, living green, and saving money.
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