How to Get a Personal Loan Paid Back

Every person that lends money to another individual wants to believe that the personal loan will be paid back. Unfortunately, personal loans that are extended to a friend or family member without any type of collateral may be tricky to recover due to the lack of any immediate consequences for nonpayment. If you have extended a personal loan to someone who has neglected to repay the debt as originally agreed, there are options available to you to help you recover your money.

Instructions

1. Remind the individual about the debt. If the personal loan was for a relatively small amount or an extended period of time has passed since you loaned him the money, it is possible that he has simply forgotten to pay you and will do so immediately.

2. Offer the debtor a repayment plan. It may not be possible for the individual to pay off the loan in one lump sum. Suggesting a repayment plan makes paying off the debt easier for the debtor, thus increasing the chances that you will be paid back.

3. Offer to allow the individual to work off a portion of the loan by assisting you with tasks you would otherwise have had to pay others to do such as yard work or home repairs.

4. Reduce the repayment amount. Although you may not be able to recover the loan in its entirety, you will be able to recover at least a portion of the balance.

5. Gather all documentation you have of the personal loan. This includes a signed contract between yourself and the debtor and any bank statements you have that illustrate the amount of the loan and when the money was deducted from your bank account.

6. File a lawsuit against the debtor in small claims court. The debtor will be notified of the lawsuit and a hearing will be scheduled. At the hearing you will be permitted to provide your evidence of the personal loan to the court. The judge will then make a decision based upon your evidence and if the debtor responded to the lawsuit. If you win, you may be able to request that the debtor's wages be garnished until the debt owed to you is repaid in full.

Tips & Warnings

• If you choose to hire an attorney, you can include your attorney's fees in the lawsuit amount.

• If the debtor is a family member or close friend, filing a lawsuit may destroy your personal relationship with him.

References

• Emily Post's Etiquette Daily: Floating a Friend - When Someone Forgets to Pay You Back
• The Law Office of Timothy L. Dave P.A.: Don't Sue Unless You Can Collect a Judgment
• Microsoft Small Business Center: Collect on a Debt - 5 Ways to Make Them Pay

Resources

• SmartMoney.com: Ready to Ruin a Friendship? We've Got a Loan Contract For You