A famous saying in Tamil on money lending- ‘கடன் அன்பை முறிக்கும்’ – (Debt breaks friendship).
One thing I have heard people say about lending money to friends is ‘it is as good as charity’. Don’t expect them to return the money and be okay with it. I was not a big believer in this as I have borrowed money and have also returned promptly.
But here’s a lesson that I learnt on money lending!
Two years ago, in December 2019, a friend of mine reached out to me asking for help. He requested that I lend him money (which was a significant sum for me). He also assured me that he will return in 3 months. I could and should have said NO. I had known this person for a while and trusted what he said.
At the end of the three-month period, I started needing the money I had lent and sent him a message asking for a full repayment as he had promised. He said the times were difficult for him. I did not bother much and waited. A couple of months later, I sent another follow-up and tried to call him. He would not pick up. But he would pick up my calls when I tried from a different number. I was frustrated with this experience.
I was beginning to lose my patience, however decided to take it slow (and) maybe let things settle for my friend. He would stop returning my messages. On persistent follow-ups, he would say he needed a payment plan. (The sum borrowed to be paid over a period of time in installments). I was okay with this. But, when I asked for his payment plan and the first installment date, he did not respond again and his answers were vague.
I kept following up for a year and also sensed arrogance in his approach towards this. It was more like I was on the receiving end and not him (which is something I did not like). Luckily the person I lent money to was in the States and decided to file a lawsuit against him. I did send a final email requesting the money to be repaid and I was also comfortable with a payment plan. I also let him know that I will be filing a lawsuit if he did not respond within a certain date. He probably thought I would not be doing this as it would cost me more money.
I decided to pursue it with an attorney. It did cost me money. When the attorneys got involved and upon filing a lawsuit, my friend who never responded to my messages and provided vague replies till then was forced to respond. Probably it cost him a bit to respond to the lawsuit (I am not sure). In the end, he agreed to settle the case with a payment schedule. I also got the first installment payment this month.
He could have done this in the first place and it would have saved me and (maybe) him attorney fees and time. I am assuming that all my installments will be paid. At the end of all this (assuming all the installments are paid) – I will probably get 20% less than what I lent him (taking into account the legal fees and more which I do not like).
This has been a great experience nevertheless – I did lose some money and time, however glad I went through this process and got this settled. One of my big learnings on lending – When you lend money with no legal paperwork – think of it as charity. Do not expect a repayment – It is just assistance you are providing. So whatever you want to lend, be prepared to lose it.