Loaning money to people with whom you don’t have a strictly professional relationship can be notoriously tricky. Many a friendship, relationship, and family bond has been torn asunder by friendly loans. While you’d like to believe that a trusted individual would repay you promptly, there are some who might take advantage of your generosity or find themselves unable to make good on their pledge to do so.
If you’ve ever been asked to give a personal loan to a friend, a family member, or to a business, you might worry about the action you could feasibly take should that party be unable to repay you. Fortunately, there are a few things you can do to ensure this individual pays back this debt.
First Thing’s First: Get Everything In Writing
It might feel uncomfortable to ask your friend or relative to sign a promissory note (which is a binding document or a very simple contract) detailing the conditions of the loan and a plan to repay it. However, it’s the best way to protect yourself and make certain you are paid back, particularly if the sum is significant. If you are extending the loan to a business, you’ll definitely want to draw up a promissory note. These notes can include when the loan needs to be repaid or even any interest you’ll want to accrue. Having a signed contract of this nature will make it much easier to be repaid later on.
If They Have Not Paid, Approach With Politeness
In many cases, debtors simply forget about a loan or may underestimate how long it will take them to pay it back. No matter the circumstances, things will usually go more smoothly if you don’t make assumptions. Keep your cool and politely inquire about when they plan to pay back the debt. This first reminder may be all it takes for them to pay you back; if they need more time, you can make your expectations clear.
Create Written Payment Requests
Unfortunately, some things don’t go according to plan. If your requests for repayment have been ignored or pushed off, you should send letters or past due notices to the borrower. Not only can these remind them of the payment they owe, but it will also create a paper trail that could come in handy later on. You should send past due notices at the 30-day, 60-day, and/or 90-day mark and keep copies for your records.
Contact A Debt Lawyer
If none of the above steps has resulted in repayment, it’s time to take further action. Although there are more than 4,500 debt collection agencies throughout the U.S., most people won’t have to deal with collectors if they’re unable to repay a personal loan. More likely, borrowers may be contacted by debt lawyers. A debt collection attorney can write a letter to the debtor on your behalf, which can actually go a long way with many borrowers. It shows that you’re serious and willing to do what’s necessary to get what you are owed. Should this not work, your debt lawyer can advise you as to whether you might want to move on to small claims court. Not every situation will warrant this action, but it’s definitely something to consider and discuss further with your debt lawyer.
Those with big hearts and the financial means to loan money to friends, loved ones, and business owners still need to protect themselves if things don’t go according to plan. Whether you may loan to someone in the future or need help securing repayment, an experienced collections attorney can help you navigate Tennessee debt collection laws and ensure you aren’t taken advantage of.