I have a relative who has unfortunately not known how to manage his finances. He has two children in private schools, and he can’t manage the payments…. He needs money for his business, and he has asked my husband and me to take out a bank loan for him, since we would be approved. Our fear is what we will do if he can’t pay us back. He has no collateral for a guarantee. In addition, his children are accustomed to living comfortably, and it is likely that part of the money would go to provide the luxuries for them that they demand.
What should we do, given that it is a considerable amount of money? Besides, he already has other debts. What do you advise us to do? Should we let him take responsibility for his bad money management, and above all have his children make do with what their parents can provide?
Yes, you should insist that your relative take responsibility for his own decisions and for his own children! And no, you should definitely not take out a loan to help him.
Wise Solomon gave some advice about lending money to others. Most often, he stressed that we should not charge interest when we lend money to someone. However, he taught that, when we see a genuine need, we are to freely give to help others rather than lending money to them.
But in this case the real issue is that you would have to borrow the money in order to provide it to your relative. Many times Solomon advised against borrowing money. In the book of Proverbs, he counsels a man who has co-signed for another that he should do everything in his power to get out of that situation.1
Your relative will probably be angry that you will not borrow money on his behalf. He may stay angry for years. However, if you were to lend money to him, you would most likely be the angry ones if he weren’t able to pay you back. You would become indignant every time you saw one of his children with an item that you consider to be a luxury. You would resent the fact that he hadn’t worked harder to pay you back. Your relationship with him would be strained, and you would be uncomfortable every time you had to see him. It’s better to let him be angry now and avoid all the emotional repercussions of lending him money.
People who are unwise with money will not change until they accept responsibility for their own actions. Usually they blame their situation on bad luck or on other people. It will probably not do any good for you to tell your relative that he is unwise or that you don’t agree with his spending. Instead, just say that you don’t have the money and you will not borrow it for him because you believe that it would be an unwise decision to go into debt for him.
We wish you well,
Linda and Charles
1 Pr 6:1-5