How to Recover Money Loaned to Family

Loaning money to family can be asking for trouble. Bad loans among relatives can lead to falling-outs that last for years. Perhaps the best advice is not to do it at all, but if you do loan money to a relative, be prepared for some unpleasantness if you're having trouble getting it back. Here are some steps to take as you try to collect on that IOU.

Instructions

1. Seek an amicable solution. Fighting usually won't get your money back any sooner. Set up a meeting or phone call and make clear that you need your money. If necessary, work out a repayment plan.

2. Reduce the amount you're asking your relative to pay back. If you're charging interest, lower the rate to encourage him to repay you.

3. Consider taking a valuable object as collateral. If the borrower doesn't have the cash, have her put up jewelry, bonds or some other valuable until she can repay the loan.

4. Call a lawyer. You may need to seek legal counsel if all else fails. Explain the situation and explore your options. If you and the borrower drew up a loan contract, show it to the lawyer.

5. Your last resort: sue. You'll be paying legal fees, so the amount you're trying to recover will have to be worth the cost.

References

• Credit.com
• National Foundation for Credit Counseling