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Say goodbye to $5,000 loan to brother

Tuesday, April 2, 2013 - 12:01 am

Q.: My brother has fallen on hard times and has asked for a $5,000 loan because he says his house will go into foreclosure. He says he will pay us back, but if history is any indication, he won't keep his word.

I don't want him to lose his house, and I have thought about setting up a payment plan for him. Your thoughts? – Reader, via email

A.: Your brother's track record indicates that if you decide to lend him $5,000, that money is likely to go out the window. If you can live with that, then OK.

Even if you come up with a payment plan, how are you going to ensure he makes the payments on time? If the house were paid for, you could certainly take back a mortgage, but apparently it is not; otherwise, there wouldn't be an opportunity for another lender to foreclose.

This is a matter of whether you can afford to give your brother $5,000. If not, as much as you might like to help, keep your checkbook closed.

Send questions to bruce@ brucewilliams.com or to Smart Money, PO Box 7150, Hudson, FL 34674. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.