Unfortunately, this is why when it comes to family, I rarely do business with them unless I know they are trustworthy. In my family, we don't owe, we just give each other what's needed without expecting anything in return. Or we make a fair arrangement with something that we owe, that we can't pay.
Here's an example. I wouldn't sell a car to a family member, but I would to someone who isn't because I would write an agreement and that person would have to pay me before taking the car.
With a family member I would just give them a 'car' if I still owed and couldn't catch up with the payments. That would obligate them to transfer it to their name and they'd have the obligation to finish paying it. It would be beneficial to them because they wouldn't have to pay a lump sum, plus I can relax and pay other bills or finance another car.
I don't think I would ever want to be in that situation with a family member. Owing sucks for menial bills, and for family it is no different. When someone is trustworthy and you know they are proven to have done some good business, then I would go for it, but not for someone who 'never' pays up.
I think in drastic situations, if I knew the person was paying me 'something' every month I could work with that. But again...it would have to be a serious emergency.