My b-i-l has got himself into some debt problems and because he’s too proud to ask for help he took a loan from one of the companies that specialise in risky debts, at close on 50% Apr. Now he’s struggling to make those payments and has asked finally for help. He wants to get another loan to repay the first from another similar co but needs me to be a guarantor. I’m happy to do it for him but wonder what the best way to do it is. I’d like the debt to be his because I have it in mind that for him to repay a loan successfully will help to rebuild a bad credit history but the rates are still excessive. I could get the same loan deal (sum / period) for him and save him thousands by doing the loan as if it was mine and getting him to standing order the repayments back to me.

Does me taking a loan affect my rating much (would be a relatively small sum as loans go) – because nowhere would I be associated to him. Equally if I act as a guarantor does the association count against me.

Not really looking for anyone to tell me not to do it or that loans are bad because he’s family and it’s taken him a lot to reach the point where he’s prepared to ask; I’m going to help him but want advice / opinions on the most effective way to help him without screwing my rating up.

Sounds to me like you are doing the right thing by helping him out and taking the loan yourself would be the best option unless you were trying to teach him a lesson (only you know if that will help/hinder). No expert on credit but I always thought taking a loan out then paying it back helped your credit rating so as long as it is paid back on time it shouldn’t hurt you at all. No idea about guarantors.

You’re better off lending him he money yourself and getting him to pay you back. Either using your savings / or taking out a loan yourself. Being a guarantor means they come after you the minute he misses a payment and you become liable for his debts – so someone else can get you in trouble. At least if you take the loan out in your name you have some control over the situation.

We are garantors for are daughters flat in edinburgh. One has come home and we are liable for the rent due each month not her. But heyho life as a parent

Looking at this from the outside a bloke is continually extending his credit lines without being able to pay them off, and now he wants you to underwrite his debts.

If you are guaranteeing it the debt it belongs to you…he’s just agreeing to meet the payments on your behalf..if he scarpers it is you who is going to get repoessessed.

because he’s too proud to ask for help he took a loan from one of the companies that specialise in risky debts, at close on 50% Apr. Now he’s struggling to make those payments and has asked finally for help.

Because NOBODY ELSE will lend him any more money as he is seen as a bad debter, and you are his last port of call.

Life is tough, what happens if you take on his debt and get made redundant or sick .

Not really looking for anyone to tell me not to do it or that loans are bad because he’s family and it’s taken him a lot to reach the point where he’s prepared to ask; I’m going to help him but want advice / opinions on the most effective way to help him without screwing my rating up.

Nice interpretations but you didn’t read the OP or are wide of the mark. Nowhere does it say he’s

continually extending his credit lines without being able to pay them off

He ended up with a rent backlog that would have gone to court so he panicked and took a loan at 50% apr. In hindsight a bad move because he’s now struggling to repay and meet other commitments like his new rent. He’s not defaulted yet – but he wants to refinance in a more effective way.

It’s £3K, I’m not going to get repossessed over that if he defaulted. He’s not yet a bad debtor, he’s a credit risk; he could get a loan but it would be at an equally bad rate unless I guarantee it in which case it’s just a shite rate. Or like I suggested I could get the loan for him and make it much cheaper but he wouldn’t get the repayment history to rebuild the rating.

So please; no judgements on whether it’s affordable or not, or whether I should let a family member go bankrupt while I stand by and don’t help even though it’s easily in my capability to help. Just please opinions on which is the better option.

Good intentions but the worst idea ever. Don’t do it he has no understanding of the value of money. If he doesn’t pay then they come after you and as Project said what if your future isn’t guaranteed. If you take a loan and he doesn’t pay then you’re out of pocket.
I assume he has something worth selling to repay his debts since he has managed to borrow plenty before to spend somewhere. He still needs to sort his spending problems out and seek help to get it under control.

Don’t. When he eventually goes down the bankruptcy / IVA route, you’ll be liable. IMO offering joint loans / guarantors is just a way for lenders to keep people on their books at nice high rates and barely servicing their debts.

Edit, just read the reply you banged out whilst I was typing. If he doesn’t own his own place, there’s no real reason to avoid just owning up to not being able to pay. Has he really not got 3k of liquidisable assets though?

assume away. “No idea of the value of money” – LOL. “Has managed to borrow plenty before to spend elsewhere.” “Needs to sort his spending problems out” Miles out I’m afraid.

He separated from his long term partner and she dicked him over continuing to pay rent for his half of their shared apartment, and as he was the name on the agreement he got screwed. He now lives in a room in shared house which for a 37 year old ex-soldier and now a prison officer who had too much pride to ask for help when he needed it is a shite outcome.

Could you help him with connditions ie pay his rent each month if he seeks councilling,kind of reward / incentive. You seem to of made your mind up so for me that would be better way for him to repay me,kind of helping him twice

If you can afford to loose the £3k, give it to him. If you have to borrow it, then you can’t afford to loose £3k.

His credit history is something for his future.

He’s your brother in law but he’s living in a room in a shared house? Or have I got the wrong end of the stick?

Ffs do not guarantor for him.

1 – its likely to link your credit records so his bad record becomes yours too.

2 – its not just 3000 its 3000 plus interest, charges, default surcharges etc which at 50% apr will rack.up because they’ll likely end up.lumped onto the balance and attracting more interest.

If YOU have a change in circumstances and can’t clear any arrears of his then you are screwed.

If you must do it then borrow the money in your name at a good ratd and make sure you can afford to pay it off if he doesn’t pay you a penny. Get a written agreement from him and a standing order for the same as your monthly loan payment.

The question you also have to ask.is how did he get the original arrears built up? If that issue is not fixed then ythe chances of him defaulting are very high.

theotherjonv – Member
assume away. “No idea of the value of money” – LOL. “Has managed to borrow plenty before to spend elsewhere.” “Needs to sort his spending problems out” Miles out I’m afraid.

He separated from his long term partner and she dicked him over continuing to pay rent for his half of their shared apartment, and as he was the name on the agreement he got screwed. He now lives in a room in shared house which for a 37 year old ex-soldier and now a prison officer who had too much pride to ask for help when he needed it is a shite outcome.

No offence intended but hadn’t given all the details in your first post.

With the value of the loan and his cash flow problems why not pay his debt off yourself and he repays you with the jobs you hate doing i.e. gardening, decorating etc. That way he sorts his finances out quicker, doesn’t feel like it’s charity and you get out of the crap jobs call it a pay advance.

Ignore my last point you answered as i typed.

No offence intended but hadn’t given all the details in your first post.

Agreed, and i didn’t really want to, which is why i made it clear I was helping and didn’t need any help in deciding whether to help, just how to. But the ignorance of that and the grossly inaccurate assumptions kind of made me see red. Sorry if I offended anyone back.

I can’t really afford to lose £3K, but i wouldn’t. He can afford to repay a loan, it’s just a struggle to meet this one and even if it wasn’t, in the clear light of day he’s seen how much he’s paying over the odds and has asked me to help him to refinance in a better way. A better (but still crap) deal with me as a guarantor, or a good rate if I own the loan but he repays me to repay the bank.

We’ve sat and looked through his finances and he doesn’t even need to cutback beyond what he already has done, other than the fact that he panicked and took a loan that needs him to pay 50% interest. I don’t want to stand by while he pays thousands extra in interest ‘just to teach him a lesson’.

borrow in your name at a good rate and get him topay you back

he’ll never get out of the debt trap if he has to borrow at 50% apr

wtf the government doesnt properly regulate that end of the market is beyond me*

*(well one of those paydayloan millionaires did buy his way into camdinewithme at no10…..)

He’s your brother in law but he’s living in a room in a shared house

Yes, he’s my wife’s brother. Not my sister’s husband.

If you do this, make sure you pay off the debt, don’t give him the money to pay off the debt.

And make sure you clear the settlement figure. Suck up the payment fee and pay iy by chaps that way there is no argument over when they received cleared funds.

If you post a cheque it may not get banked straight away so theres more interest.

With CHAPS / TT its guaranteed by close of business same day so long as you are ahead of the cutoff for your bank. Usually early pm.

Provided you can afford the repayments for the loan each month I’d get the loan in your name as the rate will be miles better. Getting a loan and repaying it will not harm your credit rating.

Been there done it.

Example 1: close personal friend was asked to guarantee business loan for boyfriend/significant other. Large dosh. Been living together 19 years at the time. S.O. goes bust and **** off. My mate is now left with the debt, while SO wanders off into the sunset scot free.

Example 2: My Brother in law needed help to set his business up. We lent him the dosh, however wifey and I had decided before we did it we could a) afford it, b) didn’t expect the money back, and c) prefered the happy family relationship to the money. (We got it back with interest).

If you are operating as a lender, apply sensible critieria, like am I going to get it back….answer YES = Do it, answer NO = don’t? If you are operating as a family member, do it without expecting it back, but hoping. Otherwise refer him to a good debt counsellor.

I’d say that if you want to help him shift his finances to help him out of a hole, fair play to you. As for his credit rating, I’d respectfully suggest that that’s a worry for another day.

Wot Berm Bandit said. Lend him the cash by clearing the loan yourself. If the situation is as you say you’ll get the money back.

The “pay day” loan lenders are scum – I don’t really get annoyed often but they are the people the term usury was invented for. I don’t know how the people who do their adverts can look at themselves in the mirror.

Get the loan out yourself and have him set up a standing order to pay you back.

Edit: I think you’re doing a good thing, I wish there were more people in the world who were as kind.

I think for 3k you’d do just as well to give him the cash and set up some manageable repayment options.

If you really like him just set yourself up to take a bit of a hit and pay the loan off faster and let him pay you back over a longer term?

Depends how much you like your sister really 😀

[list]Paying back the loan he has early should kickstart his credit rating.
If you do, it might end in tears though. Money can tear families apart, I’ve seen it happen several times. Up to you though, helping out a family member shouldn’t be seen as a bad thing.