Seidenfeld says he's already about $1,000 in the red and isn't likely to be able to pay it back for several more months. He sent his father a printout of his finances from Quicken with the hopes he would understand. "I was hoping he could just give me the money, but he did specify he wanted to be paid back," Seidenfeld says.

Bruce McClary, a media relations coordinator for ClearPoint Credit Counseling Solutions, based in Richmond, Va., says he's seen a lot of people lend family members money where everyone had the best of intentions, but it rarely turns out well.

"People put faith before fact, and in a lot of situations, they overlook the details," he says. "I think people have a big heart, but when they shake hands and say, 'Pay it back when you can,' you might as well say forget about paying me back. It becomes a gift."

McClary says he knows of one young woman who had just started out on her own, had moved out of her parents' house, obtained a job and was doing fairly well when, in an odd turn of events, her parents approached her for a loan. She wound up opening up a credit card account and giving them access to it, making them authorized users. The parents eventually ran up $5,000 to $7,000 in charges and then told her they were not going to pay her for it.

"Their reasoning was that something she did upset them, something that had nothing to do with her decision to help them," McClary says. "The end result was that she was stuck with the bill." It took her four years to dig out of the hole, and her credit was damaged in the process.

Another client of McClary's was a soldier, deployed to Afghanistan right after September 11, 2001, who had given his parents the power of attorney and oversight of his finances while he was gone, as many in the military do. But when he returned, he found his parents had opened up lines of credit using his name and had borrowed about $12,000, which they never repaid. The son refused to prosecute or even talk to an attorney about the situation.

"It was shocking because they didn't think twice when they went out and abused their son's good name," McClary says. "The family connection makes it difficult when things go bad because you want to believe the best you can in these people who have failed on their commitments, and so enforcement gets tricky."

Stuart Rohatiner, a tax manager with Gerson, Preston, Robinson & Co., an accounting firm in Miami Beach, Fla., has had to call a few clients on vacation at year's end to make sure they've made interest payments on their interfamily loan, lest it be perceived as a gift. He called one client as he was skiing a black-diamond run in Park City, Utah, and made him go back to the lodge to call his banker to make a payment. There were only a couple of hours left in the year, and the client needed to make an interest payment on the $60,000 loan he received from his mother, otherwise the tax authorities would consider it a gift.

"The IRS looks very closely at loans made between family members," Rohatiner says. "It wants to make sure that these loans are not disguised gifts. People take related-party loans too casually."

Some advisors also use loans between family members for estate planning, according to Jeffrey Asher, a partner with Eaton & Van Winkle LLP in New York. For example, a father can transfer his wealth-even temporarily-to his children at an amazingly low interest rate right now, and those children can use the loan proceeds to repay student loans, credit card debt or other liabilities; to fund the down payment on a new home; or to buy a business. The children can even borrow the money and invest the proceeds, earning a profit on the spread between what they pay their parents and what they earn on their investments. The children, of course, have to repay the loan.