Offered friend loan of $80k

[Anonymous]

I offered my friend a loan to pay off her credit card bills. I think she has been depressed for several years and finally hit bottom. She's a SAHM, two kids and hasn't worked in 7 years. She was staying home to write but somehow never got around to finishing anything. I think it's years of making excuses but she has also worked herself up to near panic attacks and I wanted to help alleviate her stress. She was thinking of declaring bankruptcy but the lawyer said she would be forced to sell her house first. I have the money and I hate the idea of her paying high interest rates and going further into debt. She has a domestic partner who is paying for most expenses but these are her own debts which she has accumulated over the years. I was hesitant about giving a loan but I blurted it out when she said the lawyer told her she would have to sell the house.

The thing is I am also angry at her for allowing herself to get into this situation. I am financially independent but I made the money completely on my own. We were on food stamps when I was little and I never had the privilege to be wasteful. The idea of going into debt is not in my DNA. In fact, I would have a lot more money if I took more risks with my money.. ie even get a mortgage. I never borrowed against money I didn't have. I hope that she has truly hit bottom and she can turn herself around. I am sad for her but I'm also angry and there's no one I can talk to about it. I'm afraid if I tell my spouse he'll berate me and I can't tell our mutual friends because of her shame.

She offered to put a lien on her house and to sign a loan agreement then she said "maybe you don't even want that because you would never call the lien in." I would never throw her out of her house even if she never pays me back in this lifetime but I still want the loan agreement. I still want her to feel responsible for her debts, but most of all I want her to turn her life around.

[Anonymous]

Unless you're willing to part with your $80K and your friendship, with no hope in getting either back, I wouldn't do it.

You offered an 80K loan (!!!) to your friend and didn't even discuss this with your spouse first?

It's hard seeing your friend hit rock bottom, but she did this to herself; she needs to learn from her mistakes and pull herself out of the hole she's created. Certainly you can lend her moral support, but I wouldn't cross the line with bailing her out.

[Anonymous]

Not very smart. You chose emotion over intellect. You should know better. I really hope you don't expect that money back because I doubt you'll ever see a penny.

She needs to go to work and pay off her own debts. Your husband could very well divorce you for doing what you did. If I were you I would tell him before he finds out.

[Anonymous]

Terrible idea. Unless you can give her an $80K gift, don't do it.

[Anonymous]

It's an $80k gift, not a loan. How is an SAHM supposed to earn the money to pay that back?

[Anonymous]

Such a terrible idea. You will NEVER see that money again. She will be back in that much debt again in a few years. Back out now!!

[Anonymous]

back out. Give any number of excuses - either that your DH said hell no or that the money is tied up.

If you lose a friendship over this, so be it.

Either you lose a fake friend ... or you lose a friend AND $80K down the road.

[Anonymous]

Anonymous wrote:Unless you're willing to part with your $80K and your friendship, with no hope in getting either back, I wouldn't do it.

You offered an 80K loan (!!!) to your friend and didn't even discuss this with your spouse first?

It's hard seeing your friend hit rock bottom, but she did this to herself; she needs to learn from her mistakes and pull herself out of the hole she's created. Certainly you can lend her moral support, but I wouldn't cross the line with bailing her out.

I also think the spouse will realize 80K is missing, that isn't something you can "steal".

[Anonymous]

Kiss that $80k goodbye if you give it to her. You will never see it again. If she can't live within her means, how is she going to repay $80,000?????? That's an insane amount of credit card debt.

[Anonymous]

She sounds like an enormous credit risk.

[Anonymous]

Don't be surprised if she racks up another mountain of debt within a year. Bailing her out is not going to show her that she needs to change her ways.

[Anonymous]

Bad idea, but do put the lien on the house. That way if they sell it, you'd get paid.

[Anonymous]

Anonymous wrote:I offered my friend a loan to pay off her credit card bills. I think she has been depressed for several years and finally hit bottom. She's a SAHM, two kids and hasn't worked in 7 years. She was staying home to write but somehow never got around to finishing anything. I think it's years of making excuses but she has also worked herself up to near panic attacks and I wanted to help alleviate her stress. She was thinking of declaring bankruptcy but the lawyer said she would be forced to sell her house first. I have the money and I hate the idea of her paying high interest rates and going further into debt. She has a domestic partner who is paying for most expenses but these are her own debts which she has accumulated over the years. I was hesitant about giving a loan but I blurted it out when she said the lawyer told her she would have to sell the house.

The thing is I am also angry at her for allowing herself to get into this situation. I am financially independent but I made the money completely on my own. We were on food stamps when I was little and I never had the privilege to be wasteful. The idea of going into debt is not in my DNA. In fact, I would have a lot more money if I took more risks with my money.. ie even get a mortgage. I never borrowed against money I didn't have. I hope that she has truly hit bottom and she can turn herself around. I am sad for her but I'm also angry and there's no one I can talk to about it. I'm afraid if I tell my spouse he'll berate me and I can't tell our mutual friends because of her shame.

She offered to put a lien on her house and to sign a loan agreement then she said "maybe you don't even want that because you would never call the lien in." I would never throw her out of her house even if she never pays me back in this lifetime but I still want the loan agreement. I still want her to feel responsible for her debts, but most of all I want her to turn her life around.

Why?

If her house is costing her too much and she can't afford to pay her debts or living expenses, then yes, selling the house is a sound financial decision.

But bankruptcy doesn't usually require one to sell their primary residence as a given so you might want to take a step back and really find out the facts.

OTOH if you have $80K to freely give away and it won't impact your finacially, just go ahead and give her the money and forget about the loan thing. She isn't ever going to pay you back anyway or she will start out making the first few payments and then the excuses will start rolling in. For a loan of $80K - figure out what the monthly payment back to you would be and see if she can even afford it. It's likely even without interest, that without a very, very long repayment period she can't come up with the monthly payment.

[Anonymous]

You are not doing her any favor by lending (or giving) her the money. The only way she can get out of this situation is a drastic change of lifestyle, which might include giving up her house. So be it. Perhaps you can help her in other ways when she moves. Moreover, lending a large sum of money without mutual agreement with your spouse - are you crazy?

[Anonymous]

What on earth were you thinking OP?

This is a horrible idea on so many levels, as everyone here has pointed out.

I hope you have reconsidered.