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Asking for money back
In 2004 and 2006 DH' parents and sister (respectively) borrowed money to purchase cars they needed to get to work and school.
Over the last year his parents have tried to make payments on the amount owed which is great. But the sister has not, nor has she mentioned even trying to pay him back. It's all about her affording to go on the Christmas vacation, then her wedding and honeymoon - - she has things she "needs" to pay for etc.
Well here's the thing. DH and I are coming into a not so great situation where we could really truly use to have that money back...like...right now. But DH has no idea how to approach this. It's his sister - the relationship is already troubled. I offered to say something to her myself with his permission and him present that we need the money back and would be happy to accept payments. But he "just doesn't know."
Can anyone offer some great advice on how to approach this? Please keep in mind it's his sister. It's always easy to say from an outside perspective that you should just go up to them and say it...but its not that easy with family sometimes. My own parents are still having problems and owe us money - I can't just go up to them (knowing whats going on) and say - - yeah by the way - - i need that back?
So if it was your sister how would you tell her to hand it over?
Re: Asking for money back
Going forward, only lend out money you don't expect to see returned to you. (If it does, great, but don't put your eggs in that basket.)
Your DH needs to ask his sister to start making payments. "Sister, we're in some difficult financial times, and we were hoping that you could start paying us back the money we lent you." She might do it, she might not. But there's no harm in asking.
H and I are having some $ issues at the moment, we have been really patient and chill regarding you paying it back and we had hoped you would have made paying back the money a priority, since you haven't we need to start having a payment from you every month in the amojunt of $____. We know you understand and want to do the right thing since we were so willing to help you out when you needed it.
I hope the 2 of you have learned a lesson about lending money,
Agreed. This is exactly the right thing to say.
Also - this sister is not going to pay you back at all. I think you need to get used to that reality. Then decide if it is going to upset you and/or affect your relationship with her (both you and DH). (Especially as she pays for trips and a pricey weddding.)
Yes we have, and we no longer let it happen unless it serious family trouble - which is 100 here or there. We no longer offer serious cash for bail outs. Not our problem.
Tell her plainly, "Sis, we lent you money with the assumption that you would pay it back. We haven't received any money from you to repay this loan, so we need you to start paying us back at the rate of $_______ per month until the debt is paid."
Do not mention that you may be having money problems, that's irrelevant. Also, since the relationship is already strained, you should be prepared for the backlash.
Never do business with relatives or friends.
Good luck with getting your money back. Don't be surprised if you don't see a penny of it.
THIS
But I hope you know that you're never going to see this money again. It's an expensive lesson, I had to learn it the hard way also.
ETA: I also tried the "here's $500 knocked off, congratulations on your graduate degree. here's $200 knocked off, Merry Christmas, here's $100 knocked off, Happy Birthday.
Eventually, I had to decide if my relationship with my niece was worth the hard feelings. She's very young so I've decided to drop it because she was always embarassed and avoiding me at holidays. It's been 10 years now. I'm over it.
I agree with all of you. We screwed ourselves.
I relayed all of this to DH and he too is expecting her to lash back in some way and to receive no money. He said he has every intention of throwing in the "I'm severely disappointed in you for not making it a priority to pay me back - instead you decided to pay for vacation, your wedding and honeymoon, and get a new car!!! (Did I mention that earlier? She had her first car paid off - - never paid DH back and a few months ago purchased a 7K Mustang) He also said that he knows his parents will say something to her as well since they did pay us back (even though it took a long time). We'll have to get over it - but I swear she is really burning our bridge here - - sister or not.
This - and I would also include that if you do decide to 'lend' money out to anyone and expect to get it back, put a payment plan schedule in writing and make sure they sign it before you hand them the money. It makes it less likely that they will take advantage of you if they know you will be holding them accountable, it gives you something to fall back on when you have to confront them on not paying you back, and it gives you some legal foothold in case you want to pursue getting your money back in court.
What I find more worrisome than the money: your DH didn't stand up to them and say "Sorry but we cannot help you."
Why did he think this was a good idea and why did you think it was, also?
I would be pissed if DH wasn't asking for it back if you really needed it. Dh's mom asks us for money all the time. Every single time its an emergency and something that happened that wasn't her fault. Before we were married, DH would lend her money all the time because she paid it back within a week so he saw it as no big deal. Once we got married, that stopped, but it was hard for me to get DH to understand since he was so used to it. Then one time we lent her a large sum that she was supposed to pay back in 3 days. It's over a year later and we still don't have it. DH asks her weekly and there is always an excuse, but when we see her she always had brand new expensive clothes, drives a 60K car ect. From this experience, I will never lend to anyone ever unless I call it a donation and can afford to not get that money back.
I would have your DH tell your sister and parents that you are coming into hard times and need to be paid back as much as they can and as quickly as they can.
'Sally, Wife and I lent you X thousand dollars in 2004 to buy a car, and we could really use that money back. What kind of payment arrangement can we make on that?" No beating around the bush on it; and it's your dh who should do it, not you, as it's his sister. Email would be fine, if he can't do it face to face (it IS hard to ask, in these situations).
She may say hell no; she may say OMG here's a check. either way, you're no worse off than before. Get your dh to do it soon.
Do you have a written agreement? If not, you should. It should say how much they borrowed and what the terms for paying if back are- monthly payments of x amount to be completed by x date.
I am guessing you are not charging them interest? Go to sister and say, if you haven't received your money by X date, you will have no other option but to start charging interest. Our financial situation no longer allows us to coddle you. I guess you know she is taking advantage of you, but it seems like she may not have an incentive not to.
Also, put this all in writing. Get it notarized. Sue them if they don't comply. Harsh? Maybe, but only the last part. Why should you have to pay for their financial mistakes? This is why we don't lend people money.
IMO, your chance of getting any money back from her is zip so I would make an attempt to write it off as a bad debt.
For the IRS, you need a notarized letter from her that she is unable to pay you back and will not be able to in the foreseeable future. Make her sign it so you can write it off this year.
It is possible that the IRS will attempt to hit her up for taxes on undisclosed income for the year you lent her the money but let her owe them instead of you.
That was the advice by my accountant in New York State. I doubt the law is any different elsewhere.
GL
When you say your DH "doesn't know" ... are you saying your DH doesn't know if he wants to ask her for the money back, that he wants the money back, or doesn't know how to go about getting the money back?
And get everything agreed to in writing, so you legally have some back up.
At the time, DH thought it was a good idea because he had it, but did not necessarily need the money. As for me - I have been raised that family is there to help. Situations like this crop up over time - its never constant so it was no big deal - it was the right thing to do. I began to see that we were enabling though when paying us back was never a priority. TheNest has educated me a great deal on what enabling is and a lot of things have changed. The tough love in this room can be hard to take but its needed sometimes.
I apologize. He "doesn't know" how to get the money back - to approach her.
This is why I don't lend money to family.
This is what Dave Ramsey (google if you don't know) would call a "Stupid Tax". If I were you, I would not expect to see my money again. DH has a brother who is ALWAYS asking for money. After losing hundreds of dollars and never seeing it again, DH put his foot down and stopped lending.
It sucks to lose money like that but sometimes lessons are learned the hard way. You can attempt to get it back from her, but don't count on it and definitely don't lend to family again unless it is a real emergency. (i.e. SIL's house burned down and needs something to cover her until insurance kicks in)
Better yet, never lend money. It's fine to gift it, but never lend it.