Deadbeat Friend Won't Repay Loan. Help! | Advice

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Almost two years ago, I loaned a friend $5,000, interest-free, who promised repayment would come from an anticipated return of a security deposit and other sources within several months.

I'm still waiting on repayment, and he cries poverty at the periodic reminders I give him about the outstanding amount: unstable work situation; car payments; other debts, etc. At the same time, I see him out socializing and at bars and clubs at least four or five nights a week, since we have a common set of mutual friends. I see little, if any effort, to make efforts to either make enough to repay me, or save expenses in order to have enough to chip away at the debt. How do I kindly request that he honor both his agreement and our friendship by repaying this amount? It's reached the point where every time I see him, I feel like he has his hand in my pocket, by what I'm losing by not having those funds back?

Dear Generous Friend,

The quick answer is that you don’t kindly request. It doesn’t seem like being Mr. Niceguy is working, so let it go, Elsa. Be upfront with your friend that they’re jeopardizing your relationship and that their behavior is unacceptable. Every relationship, whether friendship or partnership, requires communication, boundaries, and accountability. Five thousand dollars is a significant amount of money, and it may feel like an impossible task for your friend to tackle by this time, given their life circumstances. Talking with them to let them know that you need them to start working on that debt in any amount could come as a relief for them. You can be supportive while also being firm in your expectations. Create a plan together that your friend feels is achievable, and let them know the consequences for not holding up their part of the agreement. Even if they only pay you 50 or a hundred dollars a month, it’s a good-faith gesture that could save your friendship. Now comes the accountability part: you need to send a monthly update in writing on the balance owed, putting them on notice that if you can’t work through this, you will have no choice but to seek a legal remedy. You may be afraid to lose your friend, but you must remember that you didn’t create this situation, and it isn’t your responsibility to let them off the hook. You may teach them a lesson they desperately need right now. A wake-up call can come in all different forms.


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John Porter is an entrepreneur and founding partner at Oasis Asset Management. He has served as a political organizer and strategist within the Democratic Party, as well as serving as an executive board member for the Miami Yacht Club.

The advice offered in this column is intended for informational purposes only. Use of this column is not intended to replace or substitute any financial, medical, legal, or other professional advice.

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