How to Avoid the Pitfalls of Borrowing Money from Relatives to Pay Debt
Almost everyone can think of a time when they were in a financial pinch and they needed some help quickly. If you are saddled with a lot of debt and it is causing you stress and anxiety, you believe that getting a quick loan from relatives will give you a bit of breathing space. However, borrowing from family members might not be the best course of action because it will not solve your problems, but only postpone them. Let’s explore some of the other options available to you, and the best way to borrow from relatives that is a win-win for everyone concerned.
Why borrowing from relatives is not a great idea
Borrowing money when you are already in a financial bind might give you temporary relief, but then you will be in debt to a family member. If you struggle to repay the loan, it might put unnecessary strain on your relationships, which is just a different kind of stress.
If you do not have a healthy, strong relationship with the person from whom you plan to borrow the money, then it does not make sense to jeopardize that relationship any further by asking for a loan.
What if you have no other option than to borrow from relatives?
If borrowing from relatives is your only available option, here are some guidelines you can follow to avoid the pitfalls of taking a personal loan and having it ruin your relationships:
- Mutually agree that you will not allow the loan to affect your relationship.
- Go into the transaction with the intention to treat this loan as you would a loan from a bank or even more seriously.
- Hire a lawyer to draw up a written legal agreement for the loan that clearly explains the terms, interest rate, monthly payments, etc.
- Maintain clear communication with your relative throughout the course of the loan, whether or not things are going well for you.
What are your other options for resolving your debt?
If the problem is that you have large amounts of consumer debt, then resolving the debt through bankruptcy might be a good option for you. In a Chapter 7 bankruptcy, you can discharge a significant amount of consumer debt, including medical and income tax debt, if your situation qualifies. Yes, bankruptcy remains on your credit report for ten years. However, it doesn’t prevent you from getting credit for ten years. Clearing up your debts through bankruptcy can help you clean up your credit much more quickly than if you tried to slog your way through paying off those debts over time. The discharge you receive through bankruptcy relieves that load of debt and gives you a fresh start.
You will be able to get credit again and get back on a firm financial footing once you establish a new track record of paying all of your bills on time.
If you’re dreaming of a debt-free future where you don’t have to borrow from relatives to make ends meet, bankruptcy can make your vision a reality. Contact DebtStoppers today to schedule a free personal debt consultation with one of our bankruptcy attorneys. Together, we can help you break free from your debt burden so you can move forward with your life.