Conventional wisdom says friendship and finances don't mix and recent surveys back this up.

In the Bank of America's "Friends Again Report," more than half of respondents have seen a friendship end over money and 77 percent of Americans believe IOUs are harmful to friendships.

"According to our study, money is cited as a key stressor in friendships, and friends would rather talk about nearly anything -- such as drama in their family or even their weight — before talking about money," says Meredith Verdone, chief marketing officer at Bank of America told The Street. Trying to ask for the loan to be paid ranked second only to forgetting someone's name as their most uncomfortable situation.

The situation can go from bad to worse. Of those who decided to co-sign on a friend's loan, more than a third ended up having to pay some or all of the loan because the primary borrower did not, reports CreditCards.com.

So what do you do when a friend comes right out and asks you for money? Is it ever a good idea to give in? What if you really want to help? Here's how to handle this sticky situation.

Just Say No

You can say no. In fact, it's probably the best thing to say, for both you and your friend. But how do you do it in a way that is kind and relatively painless for everyone?

  • "I wish I could, but I can't afford it right now."
  • "I've lost friendships over money before, and our friendship is too important to me. Now I make a policy of not lending money."

Offer Other Forms of Help

Is there another way you can offer your friend assistance? Can you help connect her to resources or other possibilities for the loan? By offering to help brainstorm other solutions, you demonstrate your care the the true value of the friendship.

"A true friend or relative will be willing to accept no and then thank you for any additional help," Nancy Rones wrote on LearnVest. "If she doesn't, better that your relationship sours before you've forked over any funds."

If You Must Say Yes

You're willing to throw caution — and potentially your relationship — to the wind. Here's how to set yourself up for the best possible outcome.

Only lend what you can spare

You don't want to put yourself in a financial pickle in order to help your friend out of hers.

Get the loan in writing

To protect your friendship, treat this as much like a business transaction as possible. You can get a free promissory note form online. Spell out the terms of the loan, including repayment and interest. You might even consider getting it notarized.

Don't expect your money back

This bears repeating. Consider that money gone — a gift, if you like. That way, if the money isn't repaid, the transaction won't be haunted by the same emotional awkwardness of unmet expectations. (That is, at least from your end; your friend could start avoiding you due to their sense of guilt.)

"If you loan a friend or family member any money, it's best to do so without expectation of being repaid," Ryan Stewman, CEO of Hardcore Closer, LLC, told The Street. "When you loan someone close to you money, getting repaid is a bonus."

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What do you do when financial hardship hits and you can't make your monthly mortgage payments? This is a question on many homeowner's minds as nearly 17.8 million Americans are reportedly unemployed during the coronavirus pandemic.

When homeowners face financial hardship, such as the loss of a job, they often look to obtain a forbearance agreement from their lender. A forbearance happens when your lender grants you a temporary pause or reduction in monthly payments on your mortgage. Forbearance is not the same as payment forgiveness, in that you still have to pay the entire amount back by an agreed-upon time.

Mortgage lending institutions differ on their mortgage relief policies and qualifications; however, the Coronavirus Aid, Relief, and Economic Security (CARES) Act were signed into law in late March of this year to protect government-backed mortgages.

Federally backed mortgages include:

  • Fannie Mae
  • Freddie Mac
  • The Federal Housing Administration (FHA)
  • The US Department of Veteran Affairs (VA)
  • The US Department of Agriculture (USDA)

Under the CARES Act, homeowners with a federally backed loan who either directly or indirectly suffer financial hardship due to coronavirus automatically qualify for mortgage forbearance.

Even if your mortgage is not secured by one of these agencies, you still can call and see if you qualify, as many lenders will still offer the option in order to avoid foreclosures.

Under the CARES act, homeowners can claim mortgage forbearance due to financial hardship from COVID-19 for up to 12 months without requiring any documentation or verification. During the forbearance period, mortgage lenders cannot charge late fees or penalties.

Additionally, as long as your mortgage is current at the time you claim forbearance, the lender is required to keep reporting your mortgage as paid current throughout the entire period.

At the end of the forbearance, the CARES act protects consumers from having to make a lump sum payment. Instead, you will be given a repayment plan from your provider. Since repayment options vary, it's important you ask your provider about all of your repayment options.

Possible Repayment Options:

You may be eligible for a loan modification at the end of your forbearance. With modification, the mortgage terms are changed in order to add payments that were missed during the forbearance onto the end of the loan, extending the term.

Another option that may work for some is a reduced payment option. This allows you to keep paying monthly payments at a reduced amount. The amount missed is usually added back into the monthly payments at the end of the forbearance.

For example:

Regular payment: $1000 per month

Reduced payment: $500 per month

Payment after forbearance period: $1500 (until caught up)

Balloon payments, or lump sum payments at the end of the forbearance, are prohibited under the CARES Act. However, mortgage lenders may require homeowners who are not protected under the CARES Act to make a balloon payment at the end, so again it is best to check first with your provider.

Mortgage forbearance should only be considered in true financial hardship. In other words, just because of the pandemic, you should not take a forbearance on your mortgage if you can still afford your payments. Likewise, if you are able to start making payments before the forbearance period is up, it's best to do so as soon as possible.

The Next Steps:

Before you get in touch with your mortgage servicer, save time by gathering as much documentation about the mortgage as you can. Also, be ready to list your income and monthly expenses. Due to an influx in calls, financial institutions are experiencing extremely long wait times right now, and having your information at the ready will help.

Have questions ready to ask. Here are some questions you should be asking:

  • What fees are associated with the forbearance?
  • What are all the repayment options available to you at the end of the forbearance?
  • Will you be charged interest during the forbearance period?

If your forbearance is approved, make sure to keep all documentation pertaining to it. Make sure to cancel any automatic payments to the mortgage during the forbearance period, and keep tabs on your credit report to make sure your lender doesn't report the loan as unpaid.


For more information on forbearance, contact your lender and discuss your options. If you need more assistance with understanding your options, you can contact a local agent for the housing counseling agency, or call their hotline at 1-800-569-4287.