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How Can I Collect Personal Debt from a Friend, Family Member, or a Business?

What Should I Do Before Lending or Borrowing Money?

First things first, use a promissory note. Any time a significant amount of money is involved it’s probably best to get everything in writing. A promissory note documents the details of the loan and serves as a record in case any problems come up later.

How Can I Collect a Debt Owed to Me?

There’s a few things to keep in mind when pursuing a debt:

Be Polite

Even though the debtor has broken their word, collecting on a debt tends to go more smoothly if you’re polite. Contact the debtor and ask if they remember the debt and when they plan to pay. Sometimes, they may have just forgotten. But no matter what, being combative is the surest way to stall the process.

Put Your Requests for Payment in Writing

 

If your first entreaties are ignored, it’s time to send letters. 30, 60, and 90 Day Past Due Notices can be used for this purpose. They’ll create a paper trail and show your debtor that you’re serious about getting repaid. Keep copies of these letters in case you end up in court down the line.

Think about a Debt Settlement Agreement

 

If your debtor has fallen on hard times or if you’re worried about recouping your loan or if the amount you loaned is simply not worth the hassle, think about using a Debt Settlement Agreement. With this, you can amend the original agreement, changing the amount owed or the time frame in which the debtor must pay you. Sometimes, avoiding protracted courtroom battles or the worry about losing a friend over a debt can spur people to using these agreements. You’ll have to consider whether it’s right for your particular case, but it’s good to know that the option is available.

Speak With a Lawyer

Hopefully, it never comes to this but if your personal attempts to collect your debt go ignored or otherwise fail, it’s time to call a lawyer.If you were a business, a collections agency might be your best option. In personal matters, however, it’s generally smarter to enlist the help of an attorney first. Have the attorney write a letter to the debtor. The appearance of a demand letter on legal stationery can show your debtor you’re serious about getting what you’re owed.

 

What Are Some Final Options?

 

If your debtor still won’t pay then you may need to consider court. Of course, if you’ve consulted with an attorney during the process, it’s a good idea to ask his or her advice as to how to proceed. After all, every loan, every debt, and every situation is different. A good lawyer can advise you how best to navigate your unique situation.