What to Do When a BFF Asks for Money

Set up an agreement

handshakeMake sure that a contract or I.O.U. is drawn up prior to lending the money. This way you can keep a paper trail of what amount is being lent, repayment schedules, stipulations and interest accruing.

Every time a payment is made, keep track either on the back of the agreement and make sure both parties have the exact information when making payments.

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moolah3Depending on the amount, consider giving the money as a gift. After all, this could be seen as a gesture of good will and your friend will be very appreciative. A onetime gift is okay, as long as you're not struggling as a result of it.

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Friendly reminders

moolieIt’s okay to frequently remind your friend that they owe you money. If the amount of money was substantial and they haven’t begun making any payments you may want to ask them more frequently. Be polite, you don't want to ruin the friendship by nagging them.

If the repayment schedule is over an extended period of time, let’s say one a month for a year and they’ve been consistently been paying, there may not be a need to remind them.

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Third party

prosper2You can choose the option of bringing in a neutral third party agency that can draw up an agreement for you and collect the funds on your behalf. This leaves out the task of asking for the money and acting as a collector. The company can set up an ACH direct debit from the lender’s account and deposit it directly into your bank account. Prosper.com and Zopa.com offer these specific services.

Don’t expect to be repaid

badBeing that you can’t predict what will happen in the future, you should always keep in mind that you may not get your money back. You may have to take a loss if your friend is reluctant or cannot pay you back. Just take it as a lesson learned.

If the amount was large enough, you can take legal action as a last resort. In this case, you may want to consider additional fees such as court costs and attorney fees. Not only that, your friendship will most likely be in jeopardy.

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Don’t lend additional funds

monehUnder no circumstances should you loan any additional money until the entire amount of the initial loan is paid off, period.

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