If we have a debt (or a bill) we normally pay it on time, right?

Hey no. Not always do we like to pay our debt or bills. We pay our bills only on the following conditions:

1. We acknowledge it as a debt: I borrow money from friend A and lend to the business of B. It is a direct transaction – where A lends to B, and I have only falicitated the happening of the event. I may have been paid for it (business transaction) or not (personal transaction).

B defaults. So do I go and pay A?

Well it depends on the size of the transaction, how important is ‘A’ in my life (is he my sambandhi?), how important is A in my business life (does he give me a lot of business?) or how important is A in real life (is he a Police commissioner or worse a goon with a clout?).

Also what is the amount involved? If my annual income is say Rs. 50 Lakhs, and the ‘loan’ amount is Rs. 50,000, I may sound magnanimous and say ‘Hey I lost it for you – so here it is’. If my income is Rs. 500,000…I am perfectly capable of saying ‘arre he wnated interest so he lent money…bad luck’.

2. We borrow from people but lose it in business: Say I have lent Rs. 25,000 to a friend in 1985 to do some business. He did not do well in that business..it folded up. In 2013 he is in another business and doing well, should he return my money?

Well he did not ‘borrow’. He had asked me to invest in his business…and that company is perhaps sold off – and I know he did not earn money.

I do not think in his mind this is debt at all. Another friend who borrowed Rs. 500,000 for a business paid off in installments. Not that the other friends business did too well, but yes he did repay with some interest, the first friend did not. 4 of us lent him money, he repaid one guy who pressurised him to, he did not repay the people who were decent.

3. Did business with friends on a PRINCIPAL to PRINCIPAL basis, but when you go into a loss, you default on your clients dues: Right or wrong? No clue…but if people lose money in business, that becomes an excuse to tell non participating shareholders ‘lost money in business, so cannot pay you’….

Soon I will post what debts and bills we pay…and that we do not..

 

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  1. Subra: How to raise debt from friends and family? how shall we define the terms to ensure both the parties remain privy to this and are able to settle terms amicably?

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