When friends and relatives borrow money and do not repay it, the result can be fatal to the relationship that you have or had with them. Unless there is a written contract that was signed when the money was borrowed, chances are you will have lost your money plus the relationship with your friend or relative. Unfortunately, everyone loses in this situation.
The borrower may have gained free money, but their failure to repay will cost them something much more valuable. To have a friend to go to in a time of need, is priceless. A friend that loans money is one that trusts you and cares about your situation. Once that trust is broken, it is very hard to almost impossible to earn it back.
The loaner has lost out on the money. However, another choice is presented to the loaner. Forgive the person that received the loan and count it as your loss, or forgive the person and try to talk with them about some alternative resolution for repayment. Maybe that person can wash your car every week for a month, or babysit, or run errands. The alternate options should equate to the amount of the loan. If this option is not feasible, or if the borrower refuses to cooperate with you, then your only other choice is to cut both of your losses, the money and the person. A person that is unwilling to mend the situation that he or she created in the first place is most likely not a good candidate for a friend. If they are a relative, you cannot change that, but you can change your interactions and association with them.
To avoid any of this happening in the first place, it is a very good idea to implement one rule in your life. Never lend out more than you can afford to give away. If you live by this rule, it will be less of an issue when or if a person fails to repay. It will be easier to forgive them and move on. The money loss can be chalked up as a lesson about the characteristics and integrity of that person. It is good to know whom you can and cannot trust on their word. In the future, you will know that if you choose to loan them any money, again, do not expect that it will be repaid.
If the money is a significant amount (and every individual has to decide for themselves how much a significant amount is), then it is always best to loan money as a business transaction. In other words, write up an agreement to repay, have the amount borrowed, the terms of repayment and length of the time to repay, and the consequences for defaulting in writing. Both the borrower and the loaner should sign and date the agreement. It will hold up in court with even more validity if it is notarized or signed by two or three witnesses.
I Timothy 6:10 of the Holy Bible states, “For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.”
If you are too consumed with the loss of money, you will not have the heart to forgive a friend or relative for not repaying you. Money is a material that can be replaced and its value depreciates. Friends and relatives are priceless.