May 2021

“Before borrowing or lending money to or from a friend, decide which you need most – the money or the friend” Disclaimer/use of this information This information is general in nature and does not constitute legal advice.  You must not rely on it.  Legal advice based on your specific circumstances should be sought by you. Understandably, many people wish to assist family members or friends with loans from time to time. (“friendship loan”) A friendship loan carries with it significant risk. Our apologies for what may appear to be a negative tone in this information piece. The issues and concerns raised are often seen by lawyers in loan arrangements between family and friends. Too many of these arrangements turn bad. Too many relationships are significantly impacted on or end as a result of someone trying to help a close friend or family member with a loan. They are the sort of arrangements that must be very carefully considered by all involved and independent legal, taxation, accounting, financial planning and Centrelink advice obtained well before agreeing to proceed. Some considerations may include: - Often, the need for the loan is due to the fact that a bank or independent lender will not make the loan. The friend in...

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