How to Collect Debts When Personal Private Loans Go Unpaid
- 1). Have a discussion about the loan with the individual. If he has forgotten, remind him of the amount, the date of the loan and date on which he promised to repay you. Keep the tone of the conversation friendly. He may be able to make a payment immediately.
- 2). Arrange an alternative method of payment if the individual is unable to make a monetary payment but sincerely wishes to settle the debt. For instance, he could give you an item that is equal in value to the money he owes or help you complete tasks that you are unable to do.
- 3). Write a letter to the individual if he does not make immediate payment and does not indicate an intention to reimburse you. State the amount of the loan, the date on which the individual borrowed the money and the date on which he had promised to pay. Include a date by which you expect to receive the full amount of the loan. Keep the letter formal and avoid discussing personal matters. Make a copy of the letter for your records and mail the original, via certified mail, to the individual.
- 4). Contact an attorney or a collection agency for assistance. The attorney or agency can write a formal letter on an official letterhead on your behalf. Such a letter usually includes the terms of the loan and a due date for full payment. It may also contain a hint of further legal action if the individual does not comply. Compare the amount of the loan to the cost of this service to determine if it is best for you.
- 5). File a case at a small claims court if the amount of the loan falls within the range the court specifies. Most small claims courts accept cases for amounts up to $5,000. Provide evidence to support your case on the date of the hearing, such as a copy of the certified letter you wrote and the letter from the attorney or debt collection agency. When the judgment is in your favor, the defendant is obligated to pay the debt. If the individual is still unwilling to pay, you can use this judgment to garnish the individual's source of income, such as wages, until the debt is paid.
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