Loaning money to friends and family can be a sensitive subject. Most of the time the whole process goes smoothly. You loan money to a friend or family member and then you are paid back after a certain amount of time. This seems simple enough and most of the time, it is. However, there are times when loaning money to friends or family members can cause friction and tension in the relationship that you share with that particular person. Most often, this friction or tension occurs when the friend or family member does not pay back the money that you loaned to him/her. In such a situation, what should you do?
There are many ways to handle the situation. The first thing you have to consider was the amount that you let your friend or family member borrow. If the amount was something small (for example, $10), you may not care that much if you are not paid back. As such, you may want to let bygones be bygones and just forget about the whole thing. However, before you do this, you should ask about the money to see if your friend or family member had any intention of ever paying you back. Knowing this information will let you know whether you can ever trust that person with loaned money again.
On the other hand, if the amount of money that you loaned the friend of family member is a large sum, you should inquire about pay back. You should not hound the person immediately after they borrow the money, but you should inquire about a specific timeframe in which you can expect to be repaid. If the friend or family member does not pay you back within the timeframe specified by him/her, this is the time that you should start initiating collection attempts. Do not act immaturely or hostile. Instead, be kind (remember, this is your friend or family member) but firm about repayment.
If you collection attempts go unanswered, you should consider your next course of action. If it is a good friend or a close family member, you could write the loan off as a loss and refuse to ever loan that person money in the future. On the other hand, regardless of your relationship with your friend or family member, a lawsuit is always an option.
Keep in mind that if you sue your friend or family member there is a good chance that your relationship with that person will be destroyed. However, if this consequence does not concern you, a lawsuit may be your best bet. Just remember that it takes time and money to sue somebody. As such, make sure that the loaned amount is worth the hassle.
You have many options. Some are simple and some are complex. However, regardless of the course of action you choose, make sure that the chosen course is worth the repercussions and the results.