Psychologist Sandy Rea reveals what to do if your mates owe you money and when to write if off

Loaning money to mates is fraught with danger and can bring about division, jealousy and the destruction of friendships. Here’s how to get your cash back or knowing when to cut your losses.

Q: I recently loaned a few thousand dollars to a friend who had lost his marriage and walked away with nothing and then, very soon after, lost his job. He literally had nothing to eat, no money for rent or transport and was in a bad situation. Months on, he is now working again but has made no mention of paying me back and has little contact with me. I am not rich and the money came out of my family holiday fund. I would like it back when he can afford it. How do I raise this issue without ruining our friendship? Denise, Canberra.

A: Receiving, loaning, inheriting, or winning money frequently brings about division, loss, jealousy, entitlement and spurious claims among family and friends. As you may now experience, it has the potential to ruin a friendship. As the celebrated American novelist, Pearl Buck, once stated: “It is better not to say ‘lend.’ There is only giving.”

In other words: beware!

The most important question to which you need to respond to is did you establish the terms of repayment or did you simply hand over the money in good faith? It is understandable that you saw your friend in need and responded with kindness – absolutely. However, failing to articulate your expectations around repayment actually falls on your shoulders. It is entirely possible that your friend holds the view that you gifted it to him. Exchanging money must always assume a strong friendship where communication is clear.

That said, given the little contact from your friend, he’s probably aware that this was a loan and not a gift. His lack of moral imperative to repay you is pretty insightful as to his integrity and value of your friendship.

Lending money to a friend usually starts out as friendly but can turn nasty if the loan is not repaid. Picture: iStock

As such, it is difficult to understand why you raise concerns about ruining “our friendship”. What are you holding on to? What are you valuing in this friendship? If you have helped out a friend financially, and they are duplicitous in their regard to your relationship, why are you so burdened?

It would seem that you have been taken advantage of. For this, you have every right to feel betrayed and perhaps over-estimated or mischaracterised the friendship. Your friend is not acting like a friend. You should not be intimidated; rather you should demand respect for your kindness. It is your friend that needs to feel embarrassed about his moral insensitivity. He is the one who should be reflecting about whether his silence could ruin the friendship.

A simple approach is to put everything in writing via email or SMS. Let him know your happiness that he has secured employment and that he is no longer in the distressed state that he was some months ago. State the date you loaned him the money; attach a screen shot of the withdrawal. Do not ask if he could consider a repayment plan. You determine what would be fair. Suggest perhaps $200 per fortnight, which would take roughly eight months to repay.

Should this offer be met with resistance, then he is a fool. The friendship is in your eyes only. A letter from a lawyer may be your obvious recourse to speed things up.

* Sandy Rea is a leading practising psychologist with 30 years of experience across issues including relationship challenges, family and parenting related matters, adolescent and developmental issues, mental health, depression and anxiety.

Originally published as Psychologist Sandy Rea reveals what to do if your mates owe you money and when to write if off