Lending money: what would you do when your friends don't pay you back?

Question

True stories:

1 Our company went out of business.  I found a new job first.  One ex-coworker, call her P.J., had just purchased a house before losing her job, her husband's work was slow, and she had 3 kids.  She was about to lose her house.  I lent her $1,200 in December 2003. We agreed 2 years, no interest.  She has recently acknowledged the loan, but only paid back $120.00.  Nothing, no word from her, for 4 months.

2. Another ex-coworker, call her Rowan, has borrowed money from me several times.  She would pay a little, then stop, write me checks then ask me not to cash them.  Eventually she would pay me back.  Recently her relative had legal trouble, she had to move, and I lent her $500, total $750.  Her troubles are resolved for now.  Yesterday she was telling me about going halfsies with her neighbor for fiber optic ISP at $480 a year.  No mention of paying me as she discusses this luxury.

These two have been friends.  I would never do this to my friends.  What should I do?

? · Accepted Answer

Even if you could sue in small claims court, and even if you could recover your money, it wouldn't be a win for you, based on your emotions involved.

I think you should get creative.  I recommend this:  Print and send monthly bills.  Forget about the psychology of hating to be a debt collector.  This unpaid debt is eating at you, or you wouldn't have asked the question.  

So, treat it like you are a bill collector, and every month, send a bill.  Give them the opportunity to make payments, like any other creditor.

And don't do this again.  Here's why:  You saw it as a loan.  These women saw it as a gift.  Neither one was credit worthy for a reason.  You view repaying friends as a priority.  They view repaying friends as a convenience.

You now have awkward dealings with two people you considered friends.  Who knows what they feel.  

My now deceased grandmother taught me early in my life (by example) that when it comes to friends and family you do not make loans.  You make gifts or you do not do it at all.  And if the person repays you, then you have a windfall.

Anonymous · Answer

nothing
chalk it up as lesson learned
in that you cannot save people from themselves
keep in mind people in financial straights do it to them selves
by not planning and keeping reserves for such contigencies, 
so you unwisely lent them money
a bank would do it for one reason, they are credit risk, so why would you? friendship is no guarantee of repayment an only serves to stress you
if you think all of this time they were thinking of you and what they owed, you were wrong, they knew you had a soft spot and weak purse strings and took advantage, i have friends for 20 plus years and have NEVER asked to borrow, part of it is pride, part of it was I learned later in life to keep reserves and NEVER get in over my head
do you think that proposed federal bail out of some homeowner facing foreclosure is wise?
no
it only encourages more such foolishness

Anonymous · Answer

on several occasions you have lent money and got screwed.  just keep lending money.   here is why...YOU ARE A CHRONIC WHINER AND COMPLAINER....this is what you live for...keep up the good work

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Lending money: what would you do when your friends don't pay you back?

3 Answers