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What to do if you owe money to family or friends

Getting a loan from family or friends can seem like a simple option. But your relationship could be affected if things go wrong. And sometimes people might just act like friends to get you into debt with them.

Make sure you can afford to pay a friend back before you borrow from them.

Talk to them about:

  • What might happen if you cannot pay
  • Whether your relationship would be affected

You may decide it is not worth the risk.

What are other options do I have to borrowing from family or friends?

There are safer ways to borrow than from family or friends. These include:

  • Credit union loans
  • Using an authorised overdraft
  • Loans or help from a local authority
  • A wage advance from your employer
  • A budgeting loan or advance from the DWP if you receive benefits

What if I cannot afford to repay the debt?

Talk to your friend or family member if you cannot pay back money you borrowed.

Be honest.

Explain what you have coming in and what your bills are. You could even show them a copy of your household budget.

They may:

  • Let you spread your payments out, or
  • Give you some time to sort things out

Do not ignore them if you cannot pay them back right now.

  • They may think you do not plan to pay them back at all
  • It could strain your relationship

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What action can they take against me?

Technically, these debts can be pursued through the courts like any other unsecured debts.

However, in many cases you can help resolve the situation by:

  • Talking through things with your friend or family member
  • Agreeing on a way for you to pay the debt

Seek legal advice if you are facing court action.

Is your friend charging you interest?

Did someone offer you a loan when you needed it most?

This could be a friend, family member, or someone else in your community.

Whoever it is, check if they will make a profit from your loan.

  • Are they charging interest?
  • Are they adding fees?
  • Are they threatening when you do not pay?

Illegal lenders or loan sharks can be hard to spot. They may use trust or friendship to trap you in debt.

Get specialist advice before stopping payments if you think your lender may be a loan shark.

My friend or family member owes me money- what can I do?

Lending money to friends is tricky and can leave you in financial difficulty yourself.

Here are some things that could help:

Give the person a gentle reminder

People with debt problems often feel overwhelmed.

They are more likely to respond if you approach them gently.

Suggest a payment plan

Putting an affordable payment plan in place can help your loved one:

  • Pay back the debt over time
  • Not use all their money to pay you in one go
  • Stop them needing to borrow again in future

Sit down with them and work out:

  • What they can afford
  • How often they pay
  • How much they pay

Putting together a budget can help with this.

Look for ways to help them with their budget

There are lots of apps and websites that can help people budget.

They can also look at:

There are a few things to avoid if someone owes you money.

Do not:

  • Add extra money or “interest” to what they owe you
  • Tell other people about the debt
  • Lose your temper
  • Use threatening language

These are likely to make the other person avoid you. You could even be breaking the law.

I am in debt but someone wants to borrow money from me

Kindly but firmly tell them no.

You need to focus on finding your own solution if you are struggling with debts.

You can give them moral support though.

Point them towards online resources, or suggest they get some free and confidential debt advice.

Help and advice

You may need debt advice if you are borrowing money to get by.

Use our free, online debt advice tool to find the best solution for you.