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It's too bad this all happened, because you're 100% right (IMO). If you can't afford the size of the wedding, you can't afford it, and that should be the end of it. Getting money involved with family and friends ends up being a really awful situation most of the time. I hate to think that it's going to be more than 4 years from September when you are finally fully repaid... Is there any way to talk to your FI/his parents and say that you needed that money for the baby and your FI shouldn't have given it away without consulting you? Explain that you are okay with a small wedding and don't want anyone going into debt (even in debt to you) over a wedding? Ugh, good luck, and I'm sorry this all happened to you!
Ouch! I'm so sorry you're going through this because it sucks! It sounds like your FILs are grossly irresponsible with money and you and your FI should stop enpowering thier unheathly habit of spending money they don't have! I'm pretty extreme about this topic and almost see what they did as stealing from your future baby. I would be beyond pissed!
I think I would straight up talk to the future in-laws and explain what it is that transpired and how your own parents have dealt with it and how unfair it is for them to do the opposite while you're both having to cover for it with the money intended for their future grandbaby! Uuuugh ... grrr!
It also sounds like a big culture issue, in a sense that perhaps they feel that the man of the house is solely responsible for money matters, hence not asking you about it.
I would have a serious discussion with your FI about how he sees marriage and why he felt it was right to not discuss the issue with you first. They, as in your FI and his family are really setting themselves up for deep harbored resentment for what they did (and what your FI allowed to happen).
Perhaps he also has a hard time putting his foot down when it comes to his parents and that's another biggie to talk about.
I wish I had some better words of encourangement for you but I hope your FI understands how you feel and somehow makes it up to you.
Edit: If you can talk to him about how you feel without attacking his parents, it would be ideal. You don't want to hurt his feelings, but at the same time he has to understand why it's wrong.
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So we're getting married next month, we have been living together for 3 years. My FH has savings which we were going to use to start our family. In Greece it's traditional to have large weddings, although I raised my concerns about the fact no one can afford that and to go for something smaller. Both sets of parents inssited on paying for the wedding so we'd have something bigger. Up to now I have been really tight with the budget, even getting beauty school girls to do my make-up and hair. My parents invited the bare minimum as it was what we could afford. His parents went and invited 400 people. 300 to the reception. I once again raised concern because they really do not have the money, and I wasn't happy with so many coming, but, once again the culture-card was played.
Anyway I went back to UK for a few days over Christmas to sort out my dress and other things, when I returned, FH informed me that he'd lent his parents 10k because they couldn't afford to invite all these people. It's not so much lending them the money, but the fact it was not discussed with me and the fact I had wanted to go for a smaller wedding that was within my budget. What upsets me is that money was going to help us through with our first child so I wouldn't have to work for the first few months and to sort out the things we need for a baby (I'm taking folic acid now as we've decided to try as soon as we're married.). Now we'll be struggling on that. I've had a very heated discussion with FH. He can see where I'm coming from but his father was talking about going to a loan shark and he didn't want that. I am annoyed at his parents for going way over their budget, and I'm annoyed with FH for not discussing this with me first.
The payment plan is to start in September at 200 euros a month. Although we lent to them in the summ5k and are yet to start receiving anything back. I hate involving so much money with family members, especially if it means once again it's us struggling so other don't and us paying for the wants and needs of others. I wish we'd stuck to our guns of paying for everything and having full control of the guest list.