Table of contentsCh. 1: Understanding your debtChapter 1: Understanding your debtDebt load analyzerSee all stories »Ch. 2: Using equity to consolidate debtChapter 2: Using home equityRefinance vs. home equity loansSee all stories »Ch. 3: Reorganizing financesChapter 3: Reorganizing financesOrganize credit card debtSee all stories »Ch. 4: When to seek debt helpChapter 4: Seeking debt help15 signs of serious debt troubleSee all stories »Ch. 5: The bankruptcy optionChapter 5: Considering bankruptcyWhat is bankruptcy?See all stories »
The idea is not to try to create a legally binding document. You are simply putting the arrangement on a formal footing. This very basic process can make both parties more comfortable with the whole arrangement. It is a sign of respect, and it impresses upon the borrower that this is not a gift, not something that can be ignored or shrugged off later, and that repayment is definitely expected.
Also, be prepared for a "no." Your relative or friend may not be in a position to loan you cash -- or just may not want to. You need to be prepared to handle a negative answer with grace and understanding.
Jennie L. Phipps, Pat Curry, Dana Dratch and Amy Fleitas contributed to this story
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