What to do if you’ve borrowed money from family and can’t pay it back
Borrowing money from a family member can feel like a lifeline when things are tight. But if you’ve found yourself in a position where you can’t repay a family loan, it can quickly become a source of tension, guilt and shame.
You might have intended to repay it quickly, but circumstances changed. Maybe your income dropped, or other unexpected bills came up. Suddenly, the money you owe isn’t just a number – it’s tied to someone you care about.
This guide is here to help you navigate those difficult situations with practical steps, example scripts, and support options.
We’ll also explore what to do if that debt is part of a bigger money problem.
Why borrowing from family feels different
Borrowing from family often feels emotionally loaded, and without clear terms or timelines, it can quickly lead to misunderstandings and strained relationships.
The emotional toll
Owing money to someone you love is emotionally charged in a way that borrowing from a bank isn’t. You might feel embarrassed, ashamed, or afraid it will damage your relationship. And if your relative is also feeling the pinch, the pressure to pay them back can feel even more intense.
Lack of clear terms
Unlike formal loans, family lending often comes without clear terms or timelines. That can lead to misunderstandings about when and how the money will be repaid, especially if your circumstances change.
Signs money tension with relatives is building
It’s not always obvious at first, but there can be subtle signs that money issues are starting to affect your relationship. Here are some of the most common:
Behavioural changes
Conversations feel more awkward, eye contact is avoided, and your once-close relationship feels distant or strained. These can all be signs that borrowing money has started to take an emotional toll.
Mutual discomfort
You might feel guilty or avoidant. They might feel hurt or frustrated. Neither of you wants it to affect your relationship – but it can, especially if you don’t have an honest conversation.
What to do if you can’t repay a family loan
Even if it’s uncomfortable, a clear, honest chat can go a long way towards easing money tension.
- Pick a quiet moment when you can talk without distractions
- Be honest about your situation without going into unnecessary detail
- Focus on what you can do, rather than what you can’t.
Example script: ‘I know I still owe you money, and I want to talk about it. Things have changed since we spoke, and I’m struggling to repay it right now. I didn’t want to go silent or ignore it, and I hope we can agree on something that works for both of us.’
Tips for rebuilding trust when you owe family money in the UK
- Keep communication open, even if there’s no update.
- Avoid making promises you can’t keep.
- If you can’t pay the full amount, offer a small, regular payment.
Example: ‘I haven’t forgotten what I owe. I can’t manage the full amount, but I can start paying £20 a month while I get back on track. Let’s review it again in three months if that’s okay?’
Should you put a family loan in writing?
A simple written agreement can help avoid misunderstandings and keep things clear for both sides. If you’re entering a formal debt solution, family loans may also need to be documented.
Putting the loan details in writing doesn’t need to be formal. A simple agreement can outline:
- How much was borrowed
- What’s been paid so far
- What the agreed repayments look like (even if they’re currently paused).
When family debt is part of a bigger problem
If your budget simply doesn’t stretch far enough to repay the loan or if you’ve borrowed from relatives to pay for credit cards, payday loans, or essential bills, it might be time to explore broader support.
You can visit our debt solutions hub to learn about your options. A Debt Management Plan (DMP), for example, could help you reduce your unsecured debt repayments. This is an informal agreement between you and your creditors that allows you to repay your debts through affordable monthly instalments. Alternatively, if you qualify, an Individual Voluntary Arrangement (IVA) would allow you to repay the money you owe over a set period, with some debt potentially being written off after a certain timeframe. IVAs are legally-binding agreements that are designed to make your debt more manageable.
You can use our online tool to get a clearer picture of what help might be available to you.
How to avoid future money tension with relatives
Once a loan is repaid or resolved:
- Discuss boundaries for future lending or borrowing
- Share your goals to avoid needing to borrow again
- Be open about any financial advice you’re receiving.
Example: ‘I’m speaking to a debt adviser and trying to get back on top of everything. I want to avoid borrowing again in the future.’
Next steps: what to do today
- Talk to your relative – Use one of the example scripts if you’re not sure how to start
- Review your finances – See what, if anything, you can afford to repay
- Put the agreement in writing – Even if it’s just a quick message
- Explore wider debt support.
MoneyHelper offers free, impartial debt advice. You can also turn to MoneyPlus for clear, professional debt advice and solutions. Simply contact us to speak to an adviser.
