What to Do When a Friend Owes You Money

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What to Do When a Friend Owes You Money

By: Alia Hoyt
 | 

It’s a conundrum many know all too well, sometimes with painful results. A friend or family member needs to borrow a significant sum of money. Of course you want to help, but the stories about relationships ruined by failed repayment of loans are troubling. What’s a would-be Good Samaritan to do?

Indeed, it’s likely that you’ll face this problem at some point if you have a bit of cash cushion lying around. A survey by Bankrate found that 60 percent of U.S. adults have lent moolah at some point to a loved one. Of those, 37 percent said they lost money and 21 percent reported the experience hurt the relationship.

This is an experience that Ezra Cabrera knows all too well. A few years back, a childhood friend borrowed $6,000 from the content marketing manager to pay necessary bills, like rent and utilities. “She lost her job at a time when she was diagnosed with depression. It was a tough time, and I felt nothing but sympathy for her,” Cabrera recalls by email. “After a few days after she got the money, I received a call from her mom, asking if my friend was staying with me because the landlord said that her apartment was empty. Apparently, my friend ran away with my check and left her debts at home.”

Understandably, this experience had a lasting effect on Cabrera. “Now, every time someone [asks to] borrow money from me, I always go back to this experience and immediately say ‘no’ even if my heart tells me that this person needs immediate financial help,” Cabrera says. Not that she never helps anyone out — a consultation with dad helped her to sort this out. “He told me that if I feel deep in my heart that this person is sincere and needs the money ASAP, I should just give whatever I can. Give money and not lend it to them.”

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Cabrera doesn’t know exactly why her friend stiffed her, but experts say there are plenty of reasons that this happens, not all of them as sinister as you might think.

Certainly, there are plenty of other reasons, ranging from laziness to just plain jerky behavior, but many fall in these middle categories.

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Whether you’ve been burned before or not, there are some ways to ensure you either get your money back or ease the resentment that might come if you don’t.

Money is often a source of stress between friends and family, but it doesn’t have to be. Be smart, clear and intentional with your loan and hopefully everything will be just fine in the end. It’s one thing to lose some cash, but entirely another to lose a loved one over a money dispute.

There are some pretty crucial signs that’ll tell you if a person will pay back a loan, or not. “Before even considering lending money, set emotions aside and contemplate who this person you are lending to is,” says Adam Garcia, founder of The Stock Dork. Red flags are a bad financial track record or destructive habits, like habitual drinking, drug use or gambling. “Family or not, you’d be surprised what people are capable of when their judgment is frequently impaired.”

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What to Do When a Friend Owes You Money

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