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What to do if you owe money to family or friends

Borrowing money from family and friends may be a cheaper and easier alternative to lending money than a doorstep lender or payday loan. However getting into debt with someone close to you can be complicated and difficult if you’re no longer able to afford to repay the debt.

If you’re thinking about borrowing money from a friend, make sure that you’re able to afford the repayments. You should talk about what might happen if you can’t afford to pay it back and whether this would affect your relationship. Sometimes the possible strain on your relationship might not be worth it.

What are my alternatives to borrowing from family or friends?

If you’re worried that borrowing money from someone could cause problems it’s worth considering alternative or cheaper ways of borrowing money. These include:

  • Credit union loans
  • Using an authorised overdraft
  • Loans or help from a local authority welfare assistance scheme
  • A wage advance from your employer
  • A budgeting loan or advance from the DWP if you’re getting benefits

What if I can’t afford to repay the debt?

If you’ve borrowed money from a family member or friend and you can’t afford to pay them back you should first talk to them so they’re aware of your situation. They may be able to offer help by letting you spread your payments out, or give you some time to sort things out.

It can be difficult to talk to someone about this, as there’s a chance you could fall out with a family member or lose a close friend because of the money.

If you can't afford to pay your family member or friend back, don’t ignore them. If you stop seeing them, they may just assume you have no intention of paying them back at all.

Instead, tell them why you can’t afford to pay them back. Be honest. Explain what you have coming in and what essential costs you need to pay. You could even show them a copy of your household budget. That way, they can see why you can’t pay them back faster.

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What action could be taken against me?

In many cases you can help resolve the situation by talking through things with your friend or family member and coming to an agreement on how you’ll deal with the debt.

Sometimes things become more difficult and the friend or family member takes further action against you. These types of debts can be pursued through the courts, similar to other unsecured debts. If you’re facing court action of this type you should seek legal advice as this can be complicated.

A friend or family member can legally lend you money, but if someone is making a profit by lending money to you and charging interest they may be acting illegally. This type of lender is known as a loan shark, and they can’t get their money back by taking you to court. Contact us for confidential advice if you have this type of debt. 

Help and advice

If you’re borrowing money from other people because you’re struggling to pay for essential living costs, this is a sign that you may have a bigger debt problem. You should get in touch with us for free, expert debt advice.

You can use our confidential online Debt Remedy tool which gives you practical advice and a solution to your debts that's based on your sitiuation. If you'd prefer, call our Helpline (free from all mobiles and landlines) to talk to one of our advisors.

Helping you become debt free...

“I wish to thank your staff for all the great help they gave me when I was in so much debt.
They were a pillar of support to me.” (Leslie, Essex)

Foundation for Credit Counselling Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no:2757055). Authorised and regulated by the Financial Conduct Authority.

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© StepChange Debt Charity 2018