You should first consider why they asked you for a loan in the first place. Do, they have bad credit?.. were they refused at the bank?.. are you their last alternative?. Do, they have bad credit because they don’t make timely payments?. If you know all of this upfront, then it really is your own fault if they don’t pay you back, and you might as well write it off to a bad debt, or it will just cause distress between you.
If this is a close friend or relative, who through no fault of their own, have fallen on hard times, then I would lend them the money, but in reality, I would consider it my charity donation for the year, as this would be a good cause.
If on the other hand, we are talking about those inconsiderate friends or relatives, that want a twenty here or a twenty there, because they don’t manage their money very well, then I would turn the tables, and start asking them for a twenty here or a twenty there, and they will soon stop asking you.
I had a friend and co-worker, who was always disorganized in her life, she would forget her lunch, or she would spend her last dime on a manicure, and I guess just assume a sucker like me at work would lend her lunch money, or coffee money. She would ask if I wanted to go for coffee, then claim “oh I don’t have any money could you get this one, I will get the next one”, which never seemed to happen, we both made the same amount of money, and she never seemed to have any..
I finally had enough, and I came in one morning, and I said, I need you to buy me lunch today OK?.. I didn’t even give her a choice, she muttered she didn’t have enough money, she had actually hoped I had some money, and I said “No I don’t,”. I did this every day for a week, and she finally got the picture. I was not mean about it, but she finally stopped asking. If you really want to drive the message home, go to the coffee shop, and while in the line up, say “I hope you have enough money for this, because I don’t and its your turn to buy”. Then pull out your wallet and show it empty. She will either “find” some money or you have to leave the lineup, and she will now have to find a new sucker to supplement her lifestyle.
Another way to try and get paid back, is to make the loan more official. Write it down, and make them sign it, and have someone else witness it. When they realize that someone else knows about the loan, besides you two, they will feel more accountable. Not that you would ever want to take a friend or family member to court, but it just feels more official, and you need to spell out the terms, such as the payment amount.
If you did not do any of this when you first lent out the money, then you need to approach them and ask them to come up with a payment plan, if they can not pay the whole amount back, as you are out of pocket on this situation. It could be that they are simply embarrassed that they have not been able to pay you back the full amount, and have ignored you for this reason, find out their reasons and work with them. So break the ice, and come up with a payment plan, no matter how small the payments, its better than nothing. Do not yell and scream at them, this does not help, but make them realize you are not “donating” this money.
I lent my brother-in-law 500.00 dollars once, for an emergency car repair, I put it on my credit card, as I felt badly for him, he was stranded with 2 little kids. He promised to pay it back before my statement came in. When he didn’t, he would ignore me, and I only felt stupid, when I realized he had received a good size bonus from work, and spent it on something else. I really needed that money back, I couldn’t consider it a donation.
When he ignored my phone calls, I exposed him at the next family gathering, which happened to be Thanksgiving, 3 months later. I got up in front of everyone and asked “what would you do, if a relative did not pay you back money you lent in good faith?”. Everyone looked at me, and looked around the room, and my brother-in-law turned 5 shades of red. I looked him straight in the eye, and asked the question again and directed it right at him. His mother was astounded, and told him to get out his wallet. I got half that day and the other half a week later. I never lent him money again.