Banking Law

Twelve Personal Finance Mistakes - Private Banking

By Eugene S. Melchionne, Connecticut Consumer Attorne

Do you remember that saying, “Never a lender nor a borrower be”?  It is sound advice founded on personal experience.  It is amazing how often family or friends will go the extra mile to lend to each other.  It is good to support your family or friends, but nothing ruins a relationship faster than a debt that remains unpaid.  Worse yet, there is a growing trend of ‘credit lending’, where fmaily or friends will borrow the funds on their credit to lend to another.  When that debt is not paid back on schedule, the family member or friend now bears the added burden of paying someone else’s debt further straining their own budget.

Don’t do it!

If you want to make a loan to a family member or a friend, just assume that it will be a gift and never repaid.  This will do two things; first, it will remove the resentment that you might feel when the debt is not repaid and second, if you consider it a gift, it is unlikely that you will borrow the money to make the loan.  Nothing borrowed means nothing to repay.

Full post as published by Debt Law Network on May 31, 2009 (boomark / email).