You might be dreading it already: A family reunion or get-together where you know you’ll run into the relative who owes you money and hasn’t paid it back.
Maybe they swore they’d repay you, only to keeping pushing it back time and time again. Or maybe they haven’t even mentioned it.
Even if you lent them money for something important like a down payment or a car repair, you can’t keep ignoring the huge hole in your savings account. But how do you approach them without making a scene or damaging your relationship?
Here are eight key things that you should do when a family member or relative just won’t pay you back.
1. Give Them a Casual Reminder
It depends on the family situation, but sometimes all it takes is a gentle reminder. If they needed a loan in the first place, it’s likely that they had a lot on their mind.
Consider sending a quick text or email. You can also visit in person to remind them of the loan.
When you deliver the reminder, try to keep the mood light. Just make sure you communicate just how important it is that you get your money back.
2. Visit Them in Person
If your relative isn’t responding to texts, emails, or phone calls, it might be a time to visit them in person.
Having a face to face conversation is a great way for both sides to communicate their desires and concerns. It also confronts them with the issue head-on–and encourages them to pay you back sooner.
Be kind when you visit, but still be firm. Show your relative that they can’t avoid the situation and give them some options for paying you back.
3. Suggest a Payment Plan
In some cases, the relative wants to pay you back, but can’t fork it over all at once. Sit down with them and write out the conditions for your payments, including how often and how much.
Establishing some conditions to the loan and giving them a chance to pay it off piece by piece might make it more manageable for both of you. And when the deadlines are clear, it’s easier to keep your relative accountable.
4. Approach Them, Don’t Confront Them
When you’re meeting your family member in person to talk about the loan, your attitude is important. Be sure you’re just approaching them for a conversation, not confronting them for an argument.
Don’t lecture them or presume to know their financial circumstances. They may already feel bad about having to borrow money from a family member. Don’t make their guilt worse or threaten them with outside consequences.
Ultimately, being too aggressive could backfire. You could lose more than just your money–you could complicate family relations for years to come.
5. Try Using Collateral
Sometimes, a family member may struggle to pay you back because they don’t have the discipline. It’s easy to spend money on other things and not prioritize your other responsibilities–like loans.
Try negotiating an object for collateral. Something they want or enjoy but don’t need to live their day to day life would be ideal, like an iPad or a favorite book.
Hang on to this object and don’t return it until they pay you back. This isn’t meant to be a punishment–but rather an incentive to get you paid back sooner.
6. Offer to Help Them Budget
If you have a close enough relationship with the family member, ask if you can sit down with them and help them review their finances.
Money management is the first step to repaying loans. Setting up a budget might help them identify areas where they can cut down on extra costs.
Taking a close look at their finances will help you both see how they can afford to pay you back each month. You can also suggest the envelope budgeting system if they might have a hard time sticking to the plan.
7. Suggest a Loan Alternative
The unfortunate reality of loaning
money to relatives is that you might not always get it back. Whether it’s
family hostility, stressful finances, or a lack of communication, there are a
lot of circumstances where your money might disappear forever.
If you find yourself in a situation where a relative doesn’t pay you back and they ask for another loan, it might be time to look for an alternative.
Personal loans rely only on a person’s honesty. You have to trust that they’ll give you your money back. But a professional loan service can get them the money they need while still holding them accountable for paying it back.
Try pointing them towards a loan service, like cash loans from captaincash.
8. Don’t Keep Quiet About It
The last thing you want to do is let family money issues fester. Ultimately, no matter your relationship with this relative, you can’t keep quiet about the issue.
It’s not worth losing your money just to keep the peace. Even with sensitive topics like finances, you need to step forward and have that conversation, even if it’s uncomfortable.
Think about what this relationship is worth to you. You might love and care about this person, but that love and care need to include holding them accountable. If they’re not willing to try to work things out, they might not be treating you with the same consideration that you’re treating them.
What to Do When a Relative Won’t Pay You Back
If you’re having trouble getting a family member to pay you back, you’ll need to take careful steps to get your money back–and save your relationship.
Chances are, your relative might be feeling guilty and uncomfortable about the situation too. Having that conversation and implementing a plan for paying back the loan is a step in the right direction.
Looking for more advice to get yourself out of an uncomfortable situation? Check out our blog for more articles!