A friend just asked to borrow a lot of money

[jgsugden]

I would never lend money I was not willing to give, and I would NEVER go into business (partnering or lending) with a friend that I wouldn't be able to accept losing. 

If you ever get a chance to talk to an IRS Revenue Agent, ask them if they have any good stories about friends and money.  They often get brought in to investigate situations in which friends were in business together (partners or lenders).  The stories I've heard usually follow the same story - the guy actually in business does crazy stuff, including lying, to keep his business afloat: and the other guy (who usually only put in money) thought his friend wouldn't lie to him.

[Paelos]

Shit ask a CPA the same question. When it goes wrong, it goes REALLY wrong. Like a divorce.

[shiznitz]

ARISE!

The please for help have now shifted to "I need $35,000 so my kids can finish the year in their school before we move to Montana and hunker down for a year so I can get back on my feet."  The big tax refund turned out to be only $67,000, not the $200,000+ he originally represented.

[JWIV]

ARISE!

The please for help have now shifted to "I need $35,000 so my kids can finish the year in their school before we move to Montana and hunker down for a year so I can get back on my feet."  The big tax refund turned out to be only $67,000, not the $200,000+ he originally represented.

Not unexpected, but 

[Paelos]

ARISE!

The please for help have now shifted to "I need $35,000 so my kids can finish the year in their school before we move to Montana and hunker down for a year so I can get back on my feet."  The big tax refund turned out to be only $67,000, not the $200,000+ he originally represented.

I understand where he's coming from on this point. People with kids in private schools are horrified of distrupting their kids lives and yanking them out mid-year over their financial problems. That's at least what they tell themselves. If you get them to strip away the bullshit, what they are REALLY horrified of is the community knowing that shit has hit the fan, and they can no longer deny they are in huge trouble to themselves or their spouses. Pulling the kids out of private school is basically a flashing neon sign to the other big money "friends" of yours that you fucked up.

For the people I've had as clients that dealt with this, some go through it, and come out the other side realizing how deeply skewed their value system was. They are better people now than they were before. Then, on the other side you have the people that learned nothing, and call me to complain because the IRS has a tax lein on them which means they can't get a new lease on their Mercedes.  

[shiznitz]

To his credit, his wife is not in the dark. 

Look, I want this to work out for him, but it is clear that if I had helped him initially my money would likely be gone forever.

[Ironwood]

Who could have guessed ?

[schild]

A shocking turn of events. This guy is a shitheel.

[Paelos]

To his credit, his wife is not in the dark. 

Look, I want this to work out for him, but it is clear that if I had helped him initially my money would likely be gone forever.

Well yeah. Desperate people lie. He knew exactly what his refund would be since you it's a number you file on a return. It's not a mystery grab bag.

[Xanthippe]

So I have an update.  He came back this week.  This time I asked more questions.  He only needs the money to keep his business afloat.  He rents his apartment but owns his vacation home (which he has already tapped out).  Private school is already paid for through the end of the school year.

he had not actually tried to get a loan collateralized by his expected tax refund.  he is going to ask one of his banks about that tomorrow.  Another friend has offered him $25,000 if he can find the rest of the money, basically a pledge matching other pledges. 

On the one hand I feel better that this is just his business and not his life collapsing.  On the other hand, I wonder why he just doesn't fold it up and hang out a new shingle six months from now.  His only real liabilities are office rent and some debt which he could ditch in bankruptcy. 

I am still not inclined to lend him money, but I did promise updates so...

Does he still have the business? Are you still friends?

How can a person living in an apartment that he's renting yet owns a vacation home afford private school tuition for 3 kids? Maybe my priorities are all wrong.

[Ironwood]

Maybe he has a lot of generous yet gullible friends ?

[Paelos]

The guy is going to either learn a lesson out of this about what matters, or he's going to completely miss the point and ruin his family in the process until the wife leaves him and takes the kids. I've seen it go both ways.

[Ghambit]

How hawt is the wife btw?  Post pics.  Mayhaps she be available soon.

[Samwise]

The guy is going to either learn a lesson out of this about what matters, or he's going to completely miss the point and ruin his family in the process until the wife leaves him and takes the kids. I've seen it go both ways.

I'll put a hundred on the second one.

[Numtini]

Never seen it go the first way. Always the second.

[Paelos]

To be fair, I've seen a lot of these with clients. I'd say the percentages is about 20/80.

[shiznitz]

Update with semi-good news.

So "Tim" had a come to jesus moment with a group of us back in March.  Several of us sent him $2K each.  That was just a number that we could afford to lose and that as a total sum would help him cover some things.  Since then, his business has gotten a bit better but he vacated his expensive apartment and moved to a much cheaper one uptown.  His wife and kids are going to spend the summer at their Montana house and if things don't improve enough so that they can vacate Harlem, then he is moving to Montana and try and run his business from there (which is conceivable, but certainly not optimal).

All that said, the group of us that lent him the money, just got an email with the above report and a request for how we want to be paid back since he can afford to do so now.

So he made some tough choices, but things are turning around enough that he can honor his promise to repay.

[Paelos]

Good for him getting out of the financial stupidity cycle. Hopefully that money hits everyone's accounts.

[Maven]

Good idea diffusing the risk amongst multiple people (added social pressure to repay) than to put it all on yourself. A friend relationship is tough to be objective about when financial issues are between the two of you.

I had a friend that needed emergency money for medication and to cover rent. I have been burned multiple times on naively giving money to friends who needed it. The first thing I asked her was how she planned to repay -- her income, etc. Her work has been steady and I recall seeing a 401k statement at her apartment while visiting, which she indicated she could (eventually) take out a loan on. I trusted her to repay. She wasn't going anywhere -- had a kid, been local for years.

As a form of contract I asked for 4 post-dated checks in the amount I loaned ($400), zero interest because I can't exact that on a friend. So far, so good. But when you start getting into tens of thousands territories... shit!

[Thrawn]

I feel like a pauper reading this thread.  If I had a friend ask for money my response would just be along the lines of "Ha, right, good one, like I have extra money laying around to give you."

[Rendakor]

While I'm glad your friend got his shit together, I was kind of hoping for a more Nerftastic ending.