Dear Liz: My spouse’s siblings have decided my husband and I should lend his brother $11,000 to pay off three credit card bills since they “can’t.” He says the interest rates are killing him and that he can afford to pay us $200 a month. In the past, whenever this brother had money issues, his parents took care of them, bailing him out more than once. My spouse feels obligated to his family, but I see it more as being used and expect never to see the $11,000 again. If we have to go through with this, I’d prefer to have a formal legal document with some protection and collateral. I’d also like to have it written that the credit card accounts are closed and no more will be opened while the loan is being repaid. I’ve wondered if there isn’t a better way to do this safely.
Answer: How nice of your husband’s family to decide how you should spend your money. But just because you appear to be better off than they are does not mean you are obligated to support the family spendthrift.
The situation might be different if your brother-in-law’s life or health were at stake, or if he suffered an unexpected financial blow. In that case, you might want to honor your spouse’s sense of obligation (while perhaps persuading the other siblings to chip in).
In reality, however, what we have is a grown man who can’t figure out how to pay an $11,000 bill without pleading with his siblings for a bailout.
Your spouse should recommend he talk to a legitimate credit counselor about a debt management program that could lower his interest rates. He can get a referral from the National Foundation for Credit Counseling at www.nfcc.org.
If you do lend the money, you of course should formalize it with a written agreement and collateral. But understand that regardless of the precautions you take, the chances of his actually repaying the loan are slim.
You also shouldn’t imagine that the shame of the unpaid debt will deter him from asking for more money the next time he gets into trouble. This man never learned self-reliance, and you won’t teach it to him by giving him more money.
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