Brotherly Love

Tom loaned his brother money to buy a mobile home. He has a lien on the property, and his brother is a month late. Dave recommends walking away from the loan in order to save the relationship.

QUESTION: Tom in Delaware loaned his brother money to buy a mobile home. He has a lien on the property, and his brother is a month late on the loan. He also loaned him $12,000 to start a business, which has failed to produce results. Dave recommends walking away from the loan in order to save the relationship.

ANSWER: I’m going to make a weird suggestion to you, and it’s something you’re going to have to think about. You don’t have to decide on this call. I think this is causing you and him more than $24,000 worth of grief. I think the probability of him ever paying you—on time the way he’s supposed to—is very low. He can’t keep a job. He doesn’t pay his bills. He’s got multiple bankruptcies. No one in their right mind would have loaned this man money. The only reason you would have is because he’s your brother. A bank would’ve just laughed. That would’ve been their answer, right?

My weird suggestion is you’ve got plenty of money, you make plenty of money, and I think you’re going to tear your guts out and his too trying to collect money he’s never going to pay. I would just sign the thing over to him, let him have it, and walk away. Just tell him to not worry about it. I would really consider that.

Here’s the thing: Twenty-four thousand dollars does not change your life, and honestly, every time you look at this situation, every time you look at your brother, all you can think about is you were dumb to do this and he’s never going to pay it and this is always going to be a strain. I just don’t want to think like that around my brother all the time. I’d rather him just be my brother. Just say, “You know what? I’m doing well. Don’t ever ask me for money again. I’m not going to loan you any. I’m not even going to give you any.”

We could do this. We could get a little pushy about it. He needs to learn how to handle money, doesn’t he? Just say, “You know what? I’m going to pay you $24,000 to go through Financial Peace University. You go through this class, and you attend every class for nine weeks. You learn how to handle money. It’ll change your life, and at the end of that, I’m going to write you a receipt. I’m going to write you a release from both of these loans and just forgive them. But you have to go to every single class, and you have to do your budget for nine weeks while you’re in Financial Peace University.” Get him to go through the class, and when he does that, it’s worth $24,000 to him. “I really don’t want to chase you, and I don’t want to bother you. I just want you to be my brother again. I don’t want to be your banker. It’s not working well for us.”

That’s pretty extreme, and you need to think about that. You don’t need to answer me here on this call, and I’m not saying you’re dumb if you don’t do that, but I am going to tell you—and I think you know—that collecting this money from him is going to be a continuous problem until he changes the way he lives his life. We have two brothers here, and they are the opposite sides of a coin. You live your life with a lot of discipline. You live your life with a lot of organization. You’re very intentional about money. You’re very intentional about your career. And he’s all over the freaking map. Volatile, unpredictable, disorganized, not handling his life well, and you look at each other, and you go, “How did we both come out of the same house?” But that’s what happens. Kids are opposites oftentimes, so it’s not unusual.

I personally would consider that if I were you because I’m afraid it may end your relationship at some point if you hold fast to him paying something that, honestly, I don’t think he’s got the character to pay. I really don’t. I think it’s his pattern in his life that’s been bad, but if you want to put him through Financial Peace University or something like that and then just forgive the debt, that’s something I’d consider. Or maybe you forgive half of it—the old, bad business debt—and you keep the mobile home debt or something. Until this guy gets on a plan and changes the direction and trajectory of his life, you’re just another one of his failures—him not paying you—and I just don’t want to be on that list of people I love. I don’t want to be one of their failures. I don’t want to be the cause of problems for them. That’s why I don’t loan people money. Sometimes I give people money, but I just don’t loan people money, especially people I love.