The hardest debts to collect: loans to loved ones

Four years ago the cousin had some financial trouble and asked for help. At the time Toan was building his house and did not have money to spare, and so used the house to obtain a bank loan to support him.

"Every month I struggled to keep up with the interest payments, yet he never once called to check," he says.

Not wanting to hassle his cousin during tough times, he did not push for repayment. But even after his cousin’s situation improved and he bought a new car, the debt remained unpaid. When Toan finally confronted him, he returned VND200 million and said he would repay the remaining VND100 million "gradually," without mentioning interest.

"Family should help each other in times of trouble. Are you really going to charge interest?" the cousin asked, accusing Toan of being cold-hearted.

Frustrated, he showed the bank loan documents. But his cousin brushed it off. "Why didn’t you mention this earlier? How do I know you borrowed it for me and not for yourself?"

For the past two Lunar New Year holidays Toan has been visiting his cousin’s house in their hometown to collect the remaining debt, but he was never home and ignored all calls.

Duc Hai, 45, of Nam Dinh, a city near Hanoi, had a difficult experience after lending money to his brother-in-law. Five years ago his parents-in-law asked to borrow VND100 million to enable their son to go to South Korea as a guest worker. Hai gave VND20 million as a gift and lent the other VND80 million.

"From then on, my in-laws praised me wherever they went," he says.

However, the brother-in-law came back to Vietnam in just two weeks, saying he could not handle the job. Because he quit, the entire amount was lost.

Hai did not bring up the loan until last year, when he was short of money for building his house. When he asked for it back, his in-laws said they only borrowed on their son’s behalf and he should talk to him directly.

When he confronted his brother-in-law, he replied: "My parents borrowed it. Why are you asking me?"

He tried to get both sides to work out how to repay him, but neither took responsibility.

"Should I cut ties with my wife’s family over VND80 million? Even if I wanted to sue, I have no proof," he says.

Stories like Hai's and Toan's are common. A VnExpress survey of nearly 2,600 readers found that 78% had struggled to recover money loaned to relatives.

According to Pham Ngoc Trung, former head of the culture and development faculty at the Academy of Journalism and Communication, helping family financially is a long-standing tradition in Vietnam.

But such loans are usually informal, with no written agreement or clear repayment terms. If the borrower refuses to pay, many people will not sue family members for fear of damaging the relationship, he says.

"This often leads to resentment and a sense of betrayal."

A 2024 survey by U.S.-based Finance Buzz found similar results. Out of 1,000 people surveyed, 31% said they did not know if their family member would ever repay the loan. Another 24% said lending had harmed their relationship, 3% had cut ties completely, 18% had arguments, and 20% felt bitterness.

Toan says he is not sure if his cousin feels any guilt, but every time he tries to recover the money, it feels humiliating. "It is my money, yet I have to explain and plead as if I am asking for a favor," he says.

Hai rarely visits his in-laws and avoids interacting with his brother-in-law. Trung says people should think carefully before lending money, even to close family.

"You need to judge the borrower's character and ability to repay."

He believes financial matters should be clearly defined to avoid damaging relationships. Even with relatives, large loans should come with a written agreement stating when the money will be repaid and whether interest applies, he adds.

Phan Dung Khanh, a financial consultant based in HCMC, agrees and explains how people should go about it.

"For relatives who are close but not trustworthy, it is better to give a small amount as a gift than to lend a large sum."

He suggests following what banks do: check if a person can repay and prepare proper paperwork. For large sums, he recommends keeping proof that can support repayment claims.

Looking back, Toan says lending money made him realize his cousin was not the person he thought he was. Even though they grew up together and stayed in touch, he assumed their bond was based on mutual respect.

"My wife told me I am clever with money, but let my guard down with my family. I trusted him because he was family. I never thought it would end like this."

*Names in the article have been changed.