Wondering what to do when someone owes you money? Turns out you don't have to just give up. There are some ways you can help out a friend or family member without losing your life savings.
When you think of private loans, you tend to associate them with banks, building societies or other financial institutions. The fact is that a private loan covers anytime when somebody lends money to somebody else. This can be for any number of reasons, such as for buying a car or to consolidate debts.
In addition, money can be owed for goods that were given to another party on the promise of payment at a given time. If that promise is not met, then you might be wondering what to do when someone owes you money.
If a friend decides that he doesn’t want to pay you back, there’s nothing you can do, right?
Maybe not, but going forward, lending money the right way can protect you.
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1. Put It in Writing
Probably the most important you can do is to put the agreement you are making down on paper. It can be difficult to broach the subject of formalizing the loan, especially when it comes to friends and family, but it is the only evidence that a transaction has taken place and is the only thing proving that you are owed money. When it comes to what to do when someone owes you money, this proof if going to come in handy. The official document will need to be signed by both parties and will outline details of the sum of money, the time it is being paid over and the interest, if any, that will be accrued. It is essential that this step is taken or you may not have much of a chance of recovery.
2. Be Polite
First of all, be polite. If you enter the discussion about the money that is owed you in an aggressive mood, then you’re much less likely to reach an amicable conclusion. Most problems can be resolved without the need for further action.
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3. Formally Request the Money
If the dialogue fails to remedy the situation, then put your request for payment in writing. Incremental payment request notices can be used to create a paper trail which demonstrates the steps taken and can be used to legally validate the debt.
4. Consider Reaching a Compromise Agreement
If you feel that compassion is the best course of action or you do not want to go through the stress of court dates and getting lawyers involved, then you can amend the original arrangement with either a reduced amount or an extended time frame that better suits the circumstances. This can often be a move that can save face for the lender and in turn, a friendship for both people involved.
5. Seek Professional Help
Should there be an impasse and all of your personal attempts to recover your debt fail, then it is time to talk to a professional. A private debt collection specialist can assess the situation and act on your behalf without the need for expensive lawyers or court action. Debt collection professionals are not just limited to helping small businesses, they also provide a valuable service to individuals that are owed monies.
Lending money, especially to friends and relatives, can be tricky, so remember to be smart and take action if somebody is taking advantage of your good nature.
