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Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review May 1, 2006 / 3 Iyar, 5766

Loans to Family Members

By Rabbi Dr. Asher Meir


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Should I help a needy family member by giving a loan?


http://www.JewishWorldReview.com | Q: You have written that those close to us have precedence in charity, and that a loan is often the best form of charity. Should I try to help a needy family member by giving a loan?


A: Certainly family members have precedence in charity giving. In a recent column we explained that while all needy individuals are worthy charity recipients, in general we should give precedence to those closest to us, and family members are in the inner circle — "charity begins at home." In addition to this general rule of "priority according to proximity", there is a specific plea of the prophet Isaiah "don't hide from your own flesh" (Isaiah 58:7).


Loans are a praiseworthy form of aid because they don't shame the recipient and don't undermine independence and initiative.


However, great care is needed in giving loans. In Judaism, it is the responsibility of the borrower to pay back the loan, and Scripture tells us that it is "a wicked borrower who fails to repay" (Psalms 37:21). But it is also the responsibility of the lender to make sure that the repayment conditions are adequately recorded and proven. The Talmud tells us, "Anyone who has money and lends it without witnesses, transgresses the verse, 'Don't put an obstacle before the blind' (Leviticus 19:14). Reish Lakish says, he brings a curse on himself." (1) The passage goes on to explain that this applies even to a loan to an upright and reliable individual.


Anyone who takes a loan is liable to forget about it altogether, to recall the conditions (sum, repayment date, etc.) inaccurately, or to imagine other lenient considerations. Since this is part of human nature, it is incumbent on the lender to make the terms clear so as not to inadvertently encourage this kind of irresponsibility on the part of the borrower.


Similarly, the same chapter of the Shulchan Aruch (the authoritative code of Jewish Law) which explains that it is a mitzvah to lend to the needy, even more than to give them charity, states that we should not lend if the likely result is that we will dun the borrower when he or she will be unable to pay. (2)


This caveat is particularly important regarding loans to family members. Research shows that default rates on such loans to family members are very high, and that this applies even to third-party loans merely co-signed by family members.


So: If you really just want to help out a needy family member, and the vehicle of a loan is merely a way of making the recipient feel better and give you a chance to get the money back of your relative has a stretch of good luck, by all means lend the money, and let your relative know, "Pay me back whenever you can." Since you didn't specify an exact time for repayment, the borrower will never be technically in default, and so you haven't created a situation where your relative is likely to act dishonestly.


But if you are giving a loan in order to make sure that the borrower takes seriously the need to get on his feet financially, or because you really need the money later on, you should make clear to your relative that this is a serious loan. Make sure every aspect of the transaction is documented, and emphasize that in case of default you plan to take normal collection action on the loan. There is no shame in making this threat, and no shame in actually making the same collection actions as you would in any normal loan. You lent the money and you are entitled to get it back.


Involving a third party is no guarantee of compliance, as we mentioned above, but many people do find that it does improve repayment rates and diminishes friction among family members because it is the third party which sends collection reminders. There are special agencies whose main business is to facilitate and intermediate such loans, and some have extensive experience in dealing with the problems.


Helping out a needy relative with a loan to give him breathing space is a wonderful mitzvah. But particularly in this case, "loan oft loses both itself and friend", and you need to take concrete steps to avoid this all-too-common outcome. If you expect your money back, take your mitzvah seriously and make sure the borrower understands that you have the ability and the intention to enforce your rights. In this way, both you and the borrower will benefit and relations between you will be strengthened and not strained.


SOURCES: (1) Babylonian Talmud, Bava Metzia 75b. (2) Shulchan Aruch Yoreh Deah 97:1,4

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JWR contributor Rabbi Dr. Asher Meir, formerly of the Council of Economic Advisers in the Reagan administration, is Research Director of the Business Ethics Center of Jerusalem, Jerusalem College of Technology. To comment or pose a question, please click here.


Previously:

How much worker supervision is too much?
Should I turn in a colleague for inappropriate acts?
Priority in charitable giving
Trolls and ogres
How many hours of work is too many?
Can I promote my product by having it unobtrusively written into a story?
He's not heavy he's my brother
All's fair in war?, II
All's fair in war?
Girth vs. worth
Is it proper to tax bequests?
Ethics of Being Overweight
Penalized for working swiftly
When is it a bluff?
'Rate and switch'
My paycheck is late!
Should schools cater to an elite?
All's fair in love?
Comfort and Competition
Do I need the caller's permission to put a call on the speakerphone?
Overtime for lost time
Is it unethical to play suppliers against each other to get the lowest bid possible?
Do family members have precedence in charity allotments?
What the world of business can teach us about our annual process of repentance and renewal
Are religious leaders subject to criticism?
Vindictive Vendor: How can I punish an abusive competitor?
Blogging Ethics: Is the blogger responsible for defamatory posts?







© 2005, The Jewish Ethicist is produced by the JCT Center for Business Ethics