Money Confessions – I lent my brother $20k – help!
Money messes, meet real talk — straight-up advice on your biggest financial dilemmas
This week's money confession:
In January, my brother asked me for a very short-term loan. He and his wife both earn a great income – between them, they earn multiple six figures – but they've been doing an extensive gut and renovation on their home, and they were about $20k short for the builder.
He promised to pay us back within 1-2 months. Worst case scenario, he said, it would be 3 months, as their quarterly bonuses would more than cover it. It's family and we wanted to help, so we transferred the $20,000, and… we haven't heard a word from him about it since.
In June, I asked about the money and they said there had been more unforeseen expenses with the house, and they didn't have the money yet. It's now October, and they haven't mentioned it. Ever. They've finished the renovation, and they're bought new furniture and kitted out their home. When we catch up for family events it's awkward, as it's the elephant in the room – from my perspective, at least. It's now been 10 months since we lent them the money and I'm not sure what to do next?
Sarah Megginson, Head of Editorial at Finder, says:
You're not the first family to run into awkwardness about finances and you won't be the last. Others in your situation have had the added misfortune of the family member denying the loan ever existed, or lying after the fact to claim it was a "gift". So, that's one thing working in your favour!
It sounds like you didn't have any sort of written or formal agreement drawn up outlining the terms of the repayment plan. But is there any chance you have proof, in your emails or text messages, of the deal you and your brother agreed to?
If so, this is a great place to start to get a conversation happening. It's interesting how often "not talking about" becomes a default position in uncomfortable matters of money. But not bringing it up is a decision in itself – usually, one designed to keep the peace – and it rarely works for very long.
Your brother and his wife haven't been forthcoming or proactive in discussing the loan or the payback schedule, which is understandably frustrating. It's now up to you to draw their attention to it and kick the elephant out of the room, so to speak. If you have something in writing – a transfer receipt, or an email acknowledging the terms of the loan – you could forward this to them with a note.
Keep it simple, remove emotion, and stick to the facts. "We were expecting repayment by XX date, and we haven't heard from you on this, so we're keen to discuss a repayment plan. How does $2,000 a month work for you?"
Kicking off the conversation in writing is intentional, as it gives both parties the opportunity to gather their thoughts and respond with less emotion. If you don't have anything in writing, you can still send the email – it just carries a little less weight without the evidence sitting behind it. And in this situation, let this be a lesson: financial agreements and loans should always be put in writing, even those with family members. Especially those with family members!
Does OP need to demand repayment of the loan or a payment plan, stat?