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business Wednesday 4 May 2022
Millennial Money: A loved one owes you money. Now what?

By LAUREN SCHWAHN of
NerdWallet
Your sibling asked you to
cover their rent for a couple
of months while they were
between jobs. Or maybe
you loaned a friend a few
hundred bucks for a car re-
pair they couldn't afford.
You'd do anything to help
those you love. And you
did. But what should you
do when they don't pay
you back? Consider these
options.
GENTLY APPROACH THE
SUBJECT
Asking a friend or family
member for money back
may feel uncomfortable.
But sometimes a simple re-
minder is all it takes to jump-
start debt repayment.
Before reaching out, think
back to the discussions you
had when you offered the
money: Did you make it
clear that this was a loan,
not a gift? Did you con-
firm payment terms and a
deadline? Did you get the
details in writing?
Framing the conversation
around facts rather than
your feelings, or unspo-
ken opinions, can prevent
confusion. No matter the
context, bring up the issue In this June 15, 2018, file photo, cash is fanned out from a wallet in North Andover, Mass.
calmly (and privately) and Associated Press
avoid making assumptions.
Using harsh or accusatory ing and education service. repay you with service. I have planned to do with cost less than $200."
language can not only MAKE OR REVISE A PAY- "Suppose the lender needs those resources?" If the loan amount exceeds
strain the relationship, but it MENT PLAN a family room painted or TAKE LEGAL ACTION, AS A the small claims limit —
can also make your loved Ideally, before lending new faucets installed. A LAST RESORT generally $5,000 to $10,000,
one less likely to pay up. them money, you'd have borrower with those skills Thomas doesn't advocate depending on the state
"What we have to do is cre- made a loan agreement might be happy to work off suing friends or family in — the case will take signifi-
ate space for that individu- outlining how much the the debt," attorney Cara most cases. But that path cantly longer and be more
al to come out of a shame borrower owes, how they'll O'Neill, a legal editor at might be worth exploring expensive, O'Neill said. "The
mindset and perspective, pay, when payment is due Nolo, a self-help legal web- "if there are large sums of filing fees will be more and
and become less avoid- and what to do if they site, said in an email. money on the table and the lender might need to
ant to engage in a healthy can't pay. If not, or if the FORGIVE THE DEBT there is an individual who retain counsel because the
conversation," says Michael person can't meet the origi- Working out an arrange- you have reason to believe traditional court system is
Thomas Jr., an accredited nal terms, hash out a new ment can be stressful, es- has the capacity to pay," more challenging to navi-
financial counselor who plan. Consider extending pecially if your loved one Thomas says. gate without an attorney."
teaches in the University of their deadline or allowing doesn't come through. It's important to have evi- Even if you get a judgment
Georgia's financial plan- them to make smaller pay- Waiving the debt could dence on your side, too. in your favor, that doesn't
ning program. ments. Thomas says setting be the best move for your You'll have an easier time mean you'll get your mon-
Acknowledge what's hap- up automated payments peace of mind and re- proving the case if you ey back, Nitzsche says,
pening in your loved one's through a peer-to-peer lationship. However, you have a written contract, "particularly if the person
life and be upfront about platform can make it easier might reconsider giving this O'Neill said. If you think who had the judgment
your own situation. Then, to get repaid over time. person, or anyone, money you've got a chance, there against them is on certain
you can discuss how to A traditional payment plan again unless you're pre- are a couple of ways to types of protected income,
move forward. "I think the isn't the only option. Per- pared to lose the amount. proceed. like disability or Social Secu-
best approach is just to haps your friend or relative Think carefully about how "The quickest and cheap- rity. That creates an extra
come at it with a lot of could chip away at the forgiveness would impact est way to get a money wrinkle because you can't
empathy and understand- balance by periodically you. judgment is through the get a garnishment against
ing that you're both in it covering one of your bills, Thomas suggests asking small (claims) court system," wages."
together," says Thomas Nitzsche says, or paying for yourself: "If I do not get this O'Neill said. "The judge re- If you go this route, prepare
Nitzsche, director of media a meal. money back, it's not just solves small court cases in to burn bridges. Will it be
and brand at Money Man- If your loved one is strug- how will I feel, but how will one court appearance, worth it if you get your mon-
agement International, a gling to come up with this affect any of my finan- and the filing fee and ser- ey back? Will it be worth it if
nonprofit financial counsel- cash, perhaps they can cial goals or anything that vice of process fees usually you don't?q