Loans to family ‘may be counterproductive’
August 31, 2007 by admin
Filed under News, News-Loans
People who lend money to friends and family may only be a short-term fix for those in debt, according to one expert. 
Stephen Rose, the director of the not-for-profit information provider Debt Advice Bureau, argues that issuing loans to people who are in debt may only mask an underlying financial issue.
“We have seen a minority of cases where people have wracked up debts and – usually a parent – has bailed them out and paid off their credit cards.”
“And in no short space of time debts are being wracked up again,” he adds.
As such, Mr Rose argues that if someone is tempted to loan money to a loved one they could instead work with the person to establish where their money is going.
The directors’ comments follow research from DebtSmart found that out of the 59 per cent of people who had leant money to a friend, just over one in four had been repaid.
