When you are dealing with a number of debts, consolidating your debts is one option that often makes them more manageable.
By consolidating your debts, you can turn several different payments into a single payment, which makes it easier to manage and pay what you owe.
There are various ways to consolidate your debts, including using a credit card or taking out a consolidation loan.
Some people choose to consolidate their debts by borrowing money from friends or family.
In fact, 34% of Gen X-ers have borrowed large amounts of money from family members or friends.
Although this can sometimes seem like the easiest option when you need money, it’s not necessarily the best idea.
There are some benefits to borrowing from friends, but there are downsides too.
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Borrowing Money for Debt Consolidation
Many people choose to borrow money from family and friends because it’s easier than other options.
There are fewer hoops to jump through and fewer strings attached if you have a relative or friend willing to lend you the money that you need.
By borrowing a sum of money, you can pay off your debts, and focus on making manageable payments to your friend or family member instead.
If you do decide to ask someone you know to lend you money, or they offer to do it, it’s best to do so in a formal way.
Rather than have an informal verbal agreement, make sure you write down the terms of your agreement and create a payment plan to repay what you borrow.
Before borrowing from family or friends, make sure you will be able to pay them back and that there is trust and respect between you.
If not, it could cause problems for your relationship.
The Pitfalls of Borrowing from Friends and Family
Not everyone is willing to lend money to a relative or friend, and with good reason.
If you are unable to repay the money that you borrow or you fall behind on payments, the person you borrowed from has to make a decision.
They will either need to forgive the debt, losing their money, but potentially preserving your relationship, or they will decide to pursue repayment, which could damage your relationship.
Even choosing to forgive the debt could be difficult and cause resentment, as well as a disintegration of trust.
Your friends and family members may also be cautious about how much they are willing to lend you.
They know that there is always a risk they may not get their money back, even if you are certain you will be able to repay it.
For this reason, they don’t want to lend any more money than they can afford to lose.
If you miss any payments or don’t pay the money back when you say that you will, they can start to become anxious or angry if it’s money that they need.
Borrowing from friends or family might seem like an attractive option if you’re struggling with debt.
However, reaching out to access professional debt relief services is a smarter option if you want to preserve your relationships.