Have you ever faced a dilemma when it came to collecting debts from friends. Being stuck in a situation like this is confusing. However, if done the right way, you can get your money back without losing friendships. When you intend to lend money, you have to prepare a repayment plan, and learn to approach your friend with both seriousness and kindness so that he doesn't feel offended when you ask him to return the loan. As a last resort, you can take legal action. In this case, you can get the loan back, but will most likely lose the friendship.
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Method 1 of 4: Raising the Topic of Debt Payment
Step 1. Make an appointment in person
Invite him over for a chat over coffee or lunch. Choose a place with a relaxed atmosphere so that he feels comfortable when speaking openly. You can contact him via email, phone, or text message, but it will be easier for him to understand if you have this conversation in person because he can see your body language and facial expressions.
- Make sure the meeting is one-on-one so you don't embarrass the friend.
- Send him an email, text or call him on the phone and say, “I want to see you this weekend. Do you have time?"
- If you gave the purpose of the meeting, say something like, "Can we meet this Friday to discuss the loan I gave you a few months ago?"
- If you want to make sure the friend is as comfortable as possible, let him choose the meeting place. You could say, “I want to talk about a loan I gave you a while ago. Can we meet this week, at your house or nearby?"
Step 2. Remind him well
In some cases, your friend may forget that he or she owes you. Start by reminding him of the loan. You could say, "I'm glad I could help you with the loan last month, but I hope you can pay it back because I have to pay my rent soon." This warning reminds him that the money is given and approved as a loan to avoid misunderstanding if he considers it a gift.
Step 3. Speak frankly
If you've warned well, but to no avail, deal with the situation head-on. Sometimes, conveying a message in an interrogative sentence will make your efforts easier. Try saying something like, "When do you think you'll be able to repay your loan?"
- Ask him to give a definite answer. Don't accept answers like, "I hope I can repay the loan in a few months."
- If your friend tries to avoid or give vague answers, urge her to give a date. You could say, for example, “I want to make sure in a few months it won't be more than three months from now. Can we agree on that?”
Step 4. Don't leave the debt unpaid
The longer you let the friend put off the payment, the less likely you are to get the money back. In addition, if you finally decide to take the case to court, your act of leaving the debt unpaid after the agreed deadline could lead to the assumption that you did not expect the payment.
Method 2 of 4: Get Loans Repaid
Step 1. Explain why you need the money
Often people who rely on friends or family members for loans are not very good at managing their own finances. These people may selfishly think that getting money for themselves is more important than paying off the loan. In this case, it may be helpful to let them know that the loan needs to be repaid as quickly as possible.
- For example, you might say, “I have to pay my rent next month. So, I really need that money. I hope you can return it in time.”
- You could even tell him, “My finances are in a rut lately, especially with that loan. I hope you can pay it off on time so that my financial situation can recover.”
- Remember that you don't need a specific reason to get your money back. Loans must be repaid, but an excuse can be a trick to get a friend to pay off their debt without losing their friendship.
Step 2. Ask them to pay in installments
If the friend is unable to pay off all of his debts at once, ask him to pay some first to prove that he is serious about trying to repay the loan. If your friend is upfront and honest about her financial situation, you can better decide whether she can really pay her debts or needs a little more time. Regardless of the financial situation, minimizing losses is always better than losing all your money.
- You could say something like, "I would be very grateful if you could pay off some of the loan today."
- If you're worried that your friend might have a hard time repaying the loan, you could say, "I know you're still having financial problems, but could you pay some of it off today?"
Step 3. Set a deadline
Sometimes, people need a time limit. Explain to the friend that you expect him to pay off the entire loan by a certain date. You can extend the deadline if you can. Don't let debt problems cause you to lose friends, but if you really need the money, setting a specific time limit can help.
- Before the meeting, think of some payment plans that might help relieve your friend. Explaining the plan to a friend will reduce the pressure he feels because he will no longer have to rack his brain over the ideas.
- Tell him, "How much can you pay each month?"
- Try helping a friend decide the best way to make a payment by saying, “Do you have to pay bills at the beginning of the month or at the end of the month? You can pay off your loan at the opposite time making it easier for you to pay it off."
Step 4. Create a repayment plan
Set a certain deadline and payment amount and ask a friend to honor the agreement. If you have tried several other methods and are not getting any results, you can even ask him to sign official documents at this stage. This can also make it easier for friends to pay off their debts because they don't have to pay them all at once.
- Don't be shy about asking your friend to commit to your proposed payment plan or asking them to sign a formal agreement, especially if the amount you're lending them is quite large.
- Start by telling him, “This might be a bit of an exaggeration, but I want to make sure we both agree on this loan repayment plan. I've written some kind of agreement to help us solve this problem."
- Make sure your friend understands that the original document is just a suggestion, and changes can be made to make payments easier. You could say, "I know you're planning to go on vacation in May, maybe we can postpone the payment for this month?"
Step 5. Subtract the amount owed by the value of the service
It may sound strange, but a friend may be ready to help if you need it. If your friend is willing to take you to the airport, help you with house renovations, or care for your kids for free, consider reducing the amount owed for the help they provide. If your friend is really struggling to pay off their debt, this is a good idea.
- In some cases, it may be more appropriate to ask a friend to perform some services in lieu of paying a debt. For example, if you have to travel out of town, you could tell him that you have 10 days to go on work and that you need someone to water the plants and look after your dog. If he is willing to do so you will deduct about IDR 1,000,000 from the loan amount.”
- If a friend is trying to pay off their loan, but has financial problems, offer to help them in exchange for money. You could say, “I really appreciate your efforts to pay off the loan on time as agreed, but it might help if you could keep an eye on my kids this weekend while I attend the conference in exchange for this month's installment. I would really appreciate your help.”
Step 6. Determine what is most important to you
In extreme cases, you will be faced with a choice: get your money back or keep the friendship. It's a tough decision, but if you've done everything you can to get the money back and the friend really can't pay off the debt, maybe it's time to consider the loan as a gift.
Method 3 of 4: Taking the Legal Path
Step 1. Send him a request letter
The first step in the legal procedure for getting your money back is to write a letter asking your friend to pay off the debt, and giving him a grace period to collect the money. We recommend that you speak to a lawyer before sending this letter and have it certified by a notary. Letters must be sent by courier or through a postal system that uses traceable receipts so that you have proof that the friend in question has received it. Write down as many specifics as possible in the letter.
- The letter should detail the exact amount due, how long the payment deadline was missed, other methods you used to get your money back, and a possible court date if the debt is not repaid.
- For example, your letter might read: “On December 3, 2015, I lent Rp100,000,000 to brother Zoel Hakim for his construction company. I asked him to return the loan on October 3, 2015. I have tried to request repayment, either in person, in writing and tried to make a proposal for a repayment plan. Brother Zoel Hakim did not retaliate for this attempt. I want to take legal action to get my money back if by December 3, 2016 I have not received the payment. Currently, I will be scheduling a trial date to discuss this matter before a lawyer.”
- If the friend replies to the letter and pays the debt before the allotted time, you don't need to proceed with the lawsuit.
Step 2. Do some research online
The internet site exists to assist you in the legal process that will allow you to get the loan back without complicated procedures. These online references mostly offer free and paid services. In most cases, you will be advised to complete legal forms without paying and can get expert assistance for a fee, if your initial request is not effective.
- Do some online research or special apps for legal services. Most are reputable, but some will only cost you more money without guaranteeing that they will help you solve your problem.
- You can read comments from other users, ask legal officers or search the internet for information about lawyer profiles that will help you.
Step 3. Gather your documents
Before you go to court or talk to a lawyer, gather as much evidence as possible. Keep receipts, proof of transfer or bank statements, written agreements regarding payments, and all emails or or letters that you send/receive from the friend in question. All of this information is important to prove that you are truly entitled to debt repayment. In legal matters, the burden of proof is always on the prosecution, not the accused. So, keeping all the evidence will make it easier for you to prove your legal rights to the debt.
Step 4. Know about the statute of limitations
The length of time you have to demand repayment of the debt depends on your country of residence. Do your research or consult a lawyer to see if your case is subject to statute of limitations before starting legal proceedings.
Step 5. Prove the origin of your money
One of the key elements to the success of your claim is proving that you legally obtained the money lent. It may sound silly, but this is the way most people use to avoid paying debts. If you lent the money in the form of a check, a bank receipt from your account is sufficient to prove the source of the funds you lent.
- If you lend this money in cash, it may be more difficult for you to prove the existence of the loan or that you got the money from a reliable source.
- If you have proof of withdrawal of money equal to the amount lent on that date, this evidence may be admissible in court.
Step 6. Save legal decisions
Even if you win the case, it is often difficult to enforce the decision. Document any payments or omissions in payments and report back to court as soon as possible. The desire to avoid court fines and the burden of court costs can encourage friends to pay off debts according to court decisions.
Method 4 of 4: Lending Money Wisely
Step 1. Ask a friend to sign an acknowledgment of debt
Many people go this route before lending money to ensure they are covered if the debtor refuses to repay the debt at a later date. This method is considered very good for starting debt and credit matters properly because the terms of the agreement are clearly written from the start. The debt acknowledgment letter can be changed if needed, for example, a friend needs more time to pay it off. Having an acknowledgment of debt will make it easier for you if you want to take legal action in the future if this step is necessary. Read this article for more information.
Step 2. Make a written repayment plan
If you don't have time to get a friend to sign an acknowledgment of debt before borrowing money, you can always ask him to agree to a plan that includes a date when he'll have to pay off the debt. Make sure you ask for this debt repayment plan to be certified by a notary. That way this letter has legal force if in the future you have to take legal action and will encourage friends to be more serious in paying debts.
Step 3. Use the help of the application to make it easier to pay debts
There are various applications available to make it easier for friends to return your money, ranging from a debt of Rp. 500,000 for dinner to a debt of Rp. 500,000,000 for a business loan. Use an app like Splitzee, Venmo, Square Cash, Splitwise, Pay Pal, or Google Wallet to simplify requesting and receiving money.
- Slitzee, Slitwise and Square Cash are the best options if the money lent is a shared expense, such as paying a roommate's rent for a room.
- Venmo, Pay Pal and Google Wallet are recommended for larger loan amounts. You can send invoices and reminders to friends and they won't be charged if they just transfer money from one bank to another.
Step 4. Evaluate a friend before lending him money
Ask him why he doesn't take traditional ways (like a bank, credit card, etc.) to help with his finances. You also need to understand whether the financial difficulties are actually temporary or whether the friend is often experiencing financial problems. If this friend is unlikely to pay off his debt, you should not lend him money.
- Start by asking why he wants to borrow money from you.
- You may feel uncomfortable, but ask him, "Do you have any other large debts?" Before lending money to him, it seems reasonable to expect your friend to be honest about his or her financial situation.
- Ask him if he's willing to agree to a repayment deadline before giving him the money, "I understand that you're currently experiencing financial problems, but when do you think your financial situation will stabilize again?"
- Perhaps the most important thing you should ask is what he did to pay off his debt. Ask him, “What are you doing right now to change your financial situation? Can you find a side job or work overtime?"
Step 5. Don't lend money to a friend if you want to maintain a friendship with him
Despite your best efforts, there is a chance that you may lose a friend, or even both, if you lend money to a friend. Before you get into debt with a friend, make sure you're willing to lose the friendship or the amount of money you've lent.
Warning
- If your friend spends most of their money on alcohol, drugs, or gambling, seek help for them. He may have an addiction problem. If you help him quit his addiction, you have a chance to get your money back, and most importantly help him live a healthier and safer life.
- Be prepared to get negative feedback from friends. Talking about money can be stressful, embarrassing, and difficult to do. If you lend money to someone close to you, the situation can get even more complicated. A potentially negative response when you try to collect a debt could cause you to lose your friendship with the person.
