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Personal Debt Collection Success – 6 Steps to Collecting Money Owed You

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When someone owes you money, you can quickly find yourself in the personal debt collection business even though you don’t want to be.

There are so many companies out there helping people escape their responsibilities. I figured it was time to help you make sure nobody skips out.

After all…you loaned money to somebody – they promised to pay you back. You lived up to your side of the bargain – they didn’t.

Before trying anything else, offer them a debt payment plan. If that doesn’t work, take these steps to start collecting money you are owed:

1. Understand the Dynamics

The person who owes you money has broken his/her word. They’ve broken a boundary – not you. Don’t worry about being nice. Don’t worry about what they think or say about you.

The facts are that you did someone a favor and they’ve taking advantage of you. Get a little angry and stay that way. You are no longer friends and nothing you or they do from this point on is going to change that.

This doesn’t mean you have to pull out the heavy artillery.  There are plenty of ways to collect without hiring an attorney.

2. Remind Them About the Debt

Remind them of the circumstances. They asked about borrowing money…not you. They asked for a loan and you gave it to them.

Remind them what they promised to do. Be specific about the amounts and dates they agreed to.

Ask if you have it right or if you’ve made any mistakes about the date, the amount or the promise. One of three things will happen:

A. They’ll pay you right then and there – this happens about as often as politicians live up to their promises, so don’t hold your breath.

B. They’ll agree and recommit to pay you. In this case, get them to sign a letter of understanding.

C. They’ll use their selective memory skills to reconstruct the arrangement. They’ll say you gave them a gift or made an investment or whatever. They might even start being rude to you.

If that’s the case, don’t confront them. Just let them know that they are responsible to pay you and you are going to collect. Don’t give them a chance to respond. End contact at that point.

Neal’s Notes:  Here’s a novel idea.   If your dead-beat debtor is half-way motivated, gently suggest that they refinance their debt.  There are three ways people can and do move their debt around and if your debtor takes advantage of this, you’ll get your money back faster.  Yes!

3. Send a Letter

Write a letter recounting the date of the loan, the amount borrowed and any other facts regarding the transaction. This should include the repayment terms that the debtor promised to make.

In this letter, you should demand that the person who owes you the money live up to their promises. Tell them how much you expect to be paid and when.

Whatever you do, don’t get emotional. If you want to talk about your feelings, tell a friend or a therapist. The time for warm and fuzzy talk is over with this person. The letter should be cold and dry. The facts…just the facts. Be brief and very specific.

Send this as a certified letter and demand a response within 10 days of receipt. 

4.  If All Else Fails, Get Your Lawyer to Write a Letter

If your deadbeat former friend doesn’t respond favorably by the time you stipulated, it’s time to call out the artillery.

Call a local lawyer and get them to give you a quote for sending your “friend” a letter.

Give the letter you already sent to your attorney and make sure the lawyer rewrites it in her own words.

Make sure the lawyer sends the letter certified and gives you a copy.

Before you hire the attorney, get a firm price quote. Make sure the time and expense is worth it.

As a rule of thumb, the expense should be less than half the amount you want to collect.

5. Make Sure the Lawyer’s Letter Goes Out

The letter must demand payment with a specific amount and date. If you don’t receive the payment, send a copy of the lawyer’s letter again. Like the first, send this letter certified.

6. Go to Court

If the deadbeat doesn’t pony up by this time, go to court and file a small claim. You may be able to recoup your costs – ask the attendant at the court.

If the person who owes you money isn’t a complete dunce, he’ll see that you are serious about collecting the money you are owed and make a good effort to pay up.

Just by seeing how organized and committed you are, he may get his act together.

The one last step you might consider is working with a collection agency. I haven’t ever had this experience, but I bet it would work pretty well.

BONUS TIP

Next time somebody comes to you looking for a loan, send them to a peer-to-peer lending group rather than the Bank of You.

Have you ever gone through a process like this? Have you ever collected on a personal loan from a “friend”? How did you do it? Was the friendship able to survive?

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Comments

  1. Hi Neal,

    My “friend” owes me $3200 but he is old and has no money. He has roommates in his house but no other substantial income. How can I collect my money? I have the loan agreement document with his signature on it and it is notarized.

    Thanks,

    Reply

  2. Hi Neal-
    Advice please. I loaned someone $5000, with her statement and signature to repay it in full on January 25th, 2019. It’s been almost a month past that due date now and the person has cut off all contact. I sent her a payment plan offer and she never responded. I loaned her the money while she was living in Michigan, but now has relocated to Kentucky, for a job, so she says. Can I sue in Small claims court here in Michigan where the loan took place?

    Reply

  3. Hi Neal,

    I got my friend a phone under my sprint account and all of a sudden she isn’t responding my calls or messages. She owes me a past due balance of $125 plus the new $125 bill that’s due on the 8th. Besides her actual phone bill, she’s still paying off the phone which there’s about $200 left for her to pay off. Plus, since I had never had any issues with her paying me in the past, about two months ago I made the big big mistake of adding an accessory (beats by Dr. Dre) for her to my account as well which are valued at $300. I’ve called her and messaged her in all social media platforms. I’ve even messaged her mom and I’m not getting any answers. But I always see her online and posting new things which is so cynical of her. To top things off, she recently moved so I don’t even know where she lives. How could I go about her paying me back?

    Reply

    • Ifeel your pain Karen. This sucks. I would:

      a. let it go
      b. never repeat this
      c. if possible, don’t waste your time on it.

      Neal

      Reply

  4. Sir I have given $100,000 to my friend and he has stated the same on a sheet that he will pay me back that amount with his signature. But now he is not giving that money back to me.
    Can that sheet be used as a proof in the court to recover that amount? Or what else can be done regarding this?

    Reply

  6. I loaned my ex-boyfriend a substantial amount of money (I have an IOU for $32,000). Since it has been over 10 years, most of which saw him being unemployed and supported by his current girlfriend, should I even bother holding on to all the paperwork and financial records from when we lived together? We live in different states, over 1000 miles apart, and it seems like statutes of limitations would mean I’m never going to see a dime. The loans started in 2001 and ran through 2009.

    Reply

  7. Hi Neal, I really need your explanation. There is my regular and long-time customer who has purchased goods worth $10,000 on account on the 1st of July 2018. The customer has not payed credit on 30th of July 2018. The customer sends a promissory note stating that he will pay after two weeks. However, I urgently need money for my business.
    How would I repond or handle this situation?

    Please would you explain it at least half a page. Thank you for time.

    Reply

    • Thanks for your question. The only thing I could think of for fast cash is to try to get someone else to buy that receivable. Try a factoring company.

      Reply

  8. I never realized that you could have your lawyer write a letter about the debt your owed. However, I have heard that you can hire a debt recovery agency with training and tools to collect your debt. My uncle works for a construction company, and sometimes their clients don’t want to pay them back. I’ll share this article with my uncle, so he can talk to his bosses about getting their money from clients.

    Reply

  9. Advice please. I loaned a friend a substantial amount. I have a copy of the cashiers check made out to the individual. I had the person’s promise and particulars of the repayment. I never had something on paper other than a handshake and witnesses.
    Every time I asked for a written agreement the “friend” came up with some type of an excuse. What are my options at this point. I do not want to wait any longer.
    Thanks,
    J.

    Reply

  10. We just finished going threw court for a landlord that failed to let us move in the courts have awarded us 10k~ what is the best way to collect
    The attorney we used wants to char him 33% if possible I would like to avoid this

    Reply

  11. I need help ASAP. My ex owes me $3000. I want to sue him because he always makes excuses of not paying me back. I have texts messages that he promise to pay me back, but he never pay me back.

    Reply

  13. i was stupid to lend a “friend” money for his wedding at the last minute because the funds where he was expecting it from never came through. This person does not work, the house is in the spouses name along with most of the assets. I will be sending the demand letter but should i sue, be under just the one person or should i include the spouse since they are married?

    Reply

  14. Just a quick question unlike other I was forced into giving up 5000.00 I was hounded by this person and felt intimated especially when I said “No”, she preyed on my vulnerability and she’s aware of my disability which I’m confident that’s how she got what she did! She wanted even more but I continued with this excuse and that excuse when repayment came under a promissory note she stopped harassing me for what felt I still needed to lend her! Anyway, under those conditions do I seek help through a civil proceeding or can I go through criminal court for taking advantage of an risk adult! What kind of attorney would I have help me as I stated I’m an at risk adult that was taken advantage of even though I have the note my mental capacity is not well because of a brain injury! I have wrote her like you stated and I get the same answer basically she puts me down and tells me I’m harassing her! If the matter is not resolved soon my memory will never last even 1 year with the facts because of my brain injury! Do I just give power of attorney to someone who can represent me in the matter! Thank you for any advise you may offer and I hope this will offer help to others with disabilities that are in a similar situation of being taken advantage of or how I actually feel that she stold from me with no intentions of repayment even though she signed a note!

    Reply

  15. Hello Neil,
    I hope you can give me some advice. I lent a friend money, and made sure to cover myself with a promissory note. It reads as follows: I, (my name), have lended (friends name) $1,000 on 08/15/15 and $400 on 08/11/15 for a total of $1,400. She will pay back $50 a month until the 2015 tax season. Payments start on 09/15/15. Loan will we paid off in full by income tax, 02/16″. I signed the note with a date of 08/11/15 by my name, the friend signed with the same date by her name, and my Mother signed as a witness with the same date by her name. This agreement has not been honored. At first, the friend did make payments. They were sporadic and not the amount agreed upon, but i was lenient, feeling confident she would pay the full amount back. She stopped even trying to make payments for a year now. I have dozens of texts between us, with me asking when she was going to pay me back and expressing how her lack of payment was causing me financial problems, and texts back from her acknowledging the remaining owed and promising to pay by a certain date that never happens. I call her out on it, and get excuse after excuse. On 11/13/2017 a sent a text asking if the debt would finally be satisfied when she received her income tax return. She said yes. On 02/25/18 i sent her a text asking if she got her tax return. She said she was expecting it the next day and after she got off work she would go to the bank and transfer the full amount into my bank account. It is now 03/16/18, the money still has not been transferred. I am completely fed up, the debt has been past due for over 2 years now, and it has caused me financial distress multiple times. Armed with the promissory note and text messages, i want to file in small claims court. The amount is below the maximum that can be filed, and she does have a job so she has no basis to contest. Given all this information, can you tell me if there is any reasons i may not be able to win? Also, i plan on including filing fees in the amount owed, but can i also add on any anything else, such as a fee for not honoring our agreement, and pain and suffering from financial distress also due to her not honoring our agreement? No specified penalties are in the promissory note in case of default of the agreement, but it doesn’t seem like it would be unreasonable to ask. If i can, what would your recommendation be on deciding the amount on these additional fees?

    Thank you in advance for your response,
    AJ

    Reply

        • Lisa,

          Who are you to question Neal, let alone chide him. He’s obviously an expert who is helping hundreds of people. You’re a nobody.

          Next time, instead of being so stupid, try thinking a little bit instead of firing off a ridiculous comment. You obviously didn’t even read the post, idiot.

          Happy Holidays!

          Reply

  16. Hi, Neal
    I am from PA. I was dating someone for many years. We were supposed to be getting married. I loaned him $8500 for his business, as it was for our future together. At one point he agreed to pay $50 a week. That was almost a year ago. To date, he’s paid $390. We are no longer together. What would be the best way to collect, aside from telling him that we are business partners until he repays me

    Reply

  17. My situation is; the tenant that I’m subleasing from wanted me to stay in his apartment because I was always offering a helping hand and pretty much micromanaging the place. I also helped him fill a room twice cutting into my work time, because the other Roomate kept on causing issues with the new roomates. Then on oct 29 i finally found a place and told him that I was going to be moving. Then he said that he got an agreement that the Roomate causing all the mess is going to leave by the end of the month. So I declined the new place, to save trouble on the moving. But still to this date still hasn’t left and is still causing issues.
    I found out that he’s been making money of the apartment. So after the bad Roomate didn’t leave I would still pay the rent but told him why he should at less wave the utilities free. Or until the Bad Roomate left. I’ve given him so much logical reasons why he’s out of line. He’s the kinda guy that will try to be witty with his words and lie just to get his way. Now he’s saying that he’s going to go to small claims court. The two month of utilities is 78. Would he able to ask for more like if he flys in town to deal with it. Or will him sticking to agreement and me sending my time be enough? It’s not a money thing for me. It just morally wrong for what he doing. And If $78 is all he can take From me I’ll happily pay that at small claims count to let him know what and bastard he is.

    Reply

  18. Hi Neal,

    I have a situation. Met this person a year back through one of my friend. We shared some common interests. The guy was in need and our mutual friend could not help him that time so I lent him 300$. Now, this guy has never had money. Whatever he makes from his job(less than me) is evaporated within first 10 days of the month. He has also taken some loans from other friends as well. As those amounts are small he repays back to them in installments. I have reminded about the loan 3 months back and was promised to clear the due within 1 month. 2 months have passed since then. The guy has borrowed more money from other people and might want to pay them back(to continue maintain good relationship with them, as he might lose it with me) before repaying a penny to me.

    I don’t seek any legal action.

    Can anyone advise please?

    Thanks!

    Reply

  19. Neal,
    My grandfather’s doctor approached him for a loan in 2012. My grandfather agreed to lend his doctor money and wrote him a total of 3 personal check for a total loan sum of $300,000. The doctor agreed verbally to pay the money back however the terms of the loan were not put in writing. My grandfather trusted his doctor would pay him back quickly. Unfortunately that hasn’t happened. The doctor did make two payments (one for $500 and another for $2000). My mother did get the doctor to acknowledge the loan in a text message but the amount was not listed in their correspondence. The doctor has since closed his practice and is now working out of the area. We (our family) doesn’t yet fully understand the reason behind the doctor closing his practice but are concerned the doctor may not be in the position to pay back the loan. We consulted with the trust attorney (grandfather established a trust many years ago) and he advised us the statute of limitations has passed and there probably isn’t anything we can do to collect the debt. We are of course looking for a second opinion. We are considering filing a complaint with the district attorneys office so that if nothing else (if we are unable to collect) the incident will be on record. Its important to us that the doctor doesn’t take advantage of other patients, the way he took advantage of my grandfather. The fact that the doctor approached my grandfather seems unethical although I don’t know if that factors into our options in any way. Aside from taking the approach of drafting a letter of understanding, do you have any other advice to offer? Are there laws for protecting senior citizens that we should be looking into? In case it matters, we are in California. Any advice you can offer is appreciated!

    Reply

  20. I have a tenant who’s been consistently late with rent (few weeks to over a month. The 12 month lease is over in just over a month. What’s the best way to get him out, and if he doesn’t leave, raise the rent and late fees? Thanks in advance!

    Reply

  21. Over the course of 2-3 years I loaned out over $25K to one person, a “friend”. It was a verbal agreement to pay me back (most is text, twitter DMs, FB messages and verbal speak), no effort made on his part. I cannot afford an attorney and I make over the max to qualify for legal aid. At this point I am thinking of taking him to small claims because handling this as adults just isn’t working FOR HIM. I get the verbal abuse, the excuses and the emotional manipulation trying to make his faults my faults. Suicide threats, texts saying he doesn’t owe me anything, you name it, its probably happened. I sent a certified letter to his house, and one via direct mail. Immediately, I got a phone call that they went to his sister’s (lie) and there were 2 letters waiting for him. The receipt signature request was never sent back to me but I saved the VM saying there were two letters and I took photos of them and my receipt from the post office for what I paid for as evidence. After this he agreed to meet up to talk and was cutting me off when it came my time to say my piece. I gave him another letter this time with his “bill” (an excel file listing all the times I loaned money, the amounts and the accounts they came from) for him and I to both sign. I even told him these were just numbers of how much he would have to give me per week or per month to pay me back in a years time to show him how severe this had gotten and he needed to step up and at least show some effort in repayment. This was 10 months ago and I have not heard from or seen him since. He wouldn’t sign the letter, kept telling me “how could you do this to me” “I can’t believe you would go into this much detail” and later got a text saying he threw the letter in the trash and lets just “start fresh”. That to me screams “lets forget I borrowed that much that I am not going to pay back.”

    My question is, should I take him to small claims for at least $10k since that is the max here? Maybe the judge will see what a financial mess he put me in and award me more when I win? Or, should I just oust him on every social media platform so our mutual friends know what a con artist and emotional manipulator he is, so it doesn’t happen to anyone else? I am not sure what I am more angry about, the fact that he said he would pay me back and won’t, or the fact he is lying about it all and getting away with it. Any insight would be appreciated before I proceed.

    Reply

  22. Neil I have a situation and I’m hoping you can help I moved into an apartment in West Palm Beach with my boyfriend originally my name was on the lease he did not put his name on the lease which was a mistake I know we moved into A2 bedroom he agreed to split the rent with me well I had money at the time and he was paying me like a little at a time and for a little while he was paying and then it was hearing their little bits of and it was never at the right amount so I started keeping track of it every month and I think one or two months he paid the whole amount but after that it was small amounts and paid no like electric water not a bit and he did sign IOU to me that he would pay me ex amount of dollars weekly and that never happened and actually he had an accident and he had no vehicle to go to work so I gave him $500 he was supposed to pay me back the following week that never happened.Please advise

    Reply

  23. Hello Neil,
    I live in South Florida it was in West Palm at the time and I rented an apartment on I was with my boyfriend and I ended up renting a two-bedroom apartment for us I originally signed the lease he was going to go on later he did not anyways we made arrangements that we were going to pay half and if he didn’t have it in the beginning I would cover it and he would give it back to me but that was the arrangement when he could he pay the rent amount for a couple months but not any other bills and then he really wasn’t paying when he was supposed to be paying maybe like $500 which he was supposed to give me back the next week I didn’t get anything in writing because I figured it was not going to be a problem and just about 2 years ago I would like to know if you think I do have a case and if I would be able to go to small claims court any advice is greatly appreciated thank you

    Reply

  24. I’m in TX, made a personal loan for 5,000.00 to person in FL. Have a signed promissory note, original check and deposit slip for loan, bank statement showing funds were immediately paid to borrower electronically. Borrower wrote on promissory note that litigation, if necessary was to be done in TX. I’ve called both Small Claims Court clerks in each state and can’t get any decent advice other than this is time consuming. I don’t know if I should go to small claims court or try to turn this over to a debt collector.

    Reply

  25. I have a feind of mine that i have knowm over 30 years now. I loaned her 4200 dollars to get her teeth fixed. She said she was going to pay me back. It has been ober a year now and nothing from her yet. I sent a fb message today and still no reply. What should i do about this situation ?? She lives in texas and i live in washington. Is court only take one day or more than that. I need to know so i can take off work so i can be there.

    Reply

  26. I have a feind of mine that i have knowm over 30 years now. I loaned her 4200 dollars to get her teeth fixed. She said she was going to pay me back. It has been ober a year now and nothing from her yet. I sent a fb message today and still no reply. What should i do about this situation ??

    Reply

  27. I have a friend who owes me $200 (a total of different loans). It’s not much but I’m only 19 and it’s a lot to me. She said she’d pay me back, which is the only reason why I lent her the money in the first place! The first $100 was a verbal agreement so i don’t know if I can file for it but the others are through text messages. I messaged her about it and she kept saying on her next pay check she’d pay me back but a few days ago she stop texting me. I continuously tried texting her about it and she ignores me and I also said that I’ll take her to court as a bluff seeing if she’d pay back but still no response. She also text other people saying that I lent the money to her as a gift (yet she doesn’t respond to me/ I know because the other people are more my friends than hers and they showed me the text) Can I really take this to court?

    Reply

    • My guess is yes you can use Small Claims but you should check locally. More important, do you want to spend your time for $200? I think it’s a cheap lesson if you don’t repeat the error my friend.

      Reply

  28. Hey, I could really use some help Neal. I loaned a friend close to $3,000. All in seperate instances. I am trying to get it back. We only had a verbal agreement. Do you think this will hold up in small claims court? I read that if the amount is over $500 it must be a written contract in order to be collectible in massachusetts.

    Thanks Neal!

    Reply

  29. I let someone live in my home after they got kicked out for two months, the second month they got a job and moved out at the beginning of the third month. I have texted him and called him about the money, he got paid one monday, spent all of his check and said he will give us the money next check. I just spoke to him today because he was supposed to get paid again tomorrow(Monday) he said he cant pay us because he no longer works there. We told him that if he has transportation issues he can stay with us for a little longer so he can wait to get a transfer to his job closer to his now home. He owes us $150 and money to get our couch that he slept on cleaned (Because our red and gold couch is now blackened.) He won’t give us what he owes even if we tried to work with him about it. What do I do?

    Reply

  30. Hey Neal,

    I’m in need of your advice. First, the amount I’m owed is from October 2014 and I am unsure whether it has been too long to sue for the amount owed. I have an ex-boyfriend that needed money to fix his car, fix his computer, and pay some bills. I helped him out with the money because I naively thought he would pay me back. I had him write up a note in his hand writing that stated that he would repay me for the amount of $3300. The note stated the money being lent for each item individually and we both signed. Then while we were still dating in January 2015 he asked to be lent more and we edited the note to $7229. We both signed again. We broke up a couple months later and I still haven’t received any payment. I really need my money back. Do you feel that the note he wrote and we signed for will assist and hold up in court or will it not make much of a difference? Has it been too long to sue? Would I be better off going after only up to $5000 of the debt to be able to use small claims court or am I not allowed to do that? Thank you!

    Reply

    • Thanks Rebecca, I am very sorry you are dealing with this. I am not an attorney and I’m not familiar with your state laws – but I would go after him for the $5k. Mabye check at the court if this is OK but I imagine it’s fine.

      Good luck!

      Neal

      Reply

  31. Hello, Neal
    I have 2 issues I’d like some advice on:

    5 months ago my ex-brother-in-law wanted to buy my Magic cards from me for his girlfriend. It was verbally agreed on that both he and his girlfriend would pay a total of $400, paying a bit each month when they can. I thought him a man of his word, so I let him take the cards with him when they left. The first payment he said he would make on Friday ($50) when he got paid. Friday came, nothing. Then he said he would pay me on the 29th of April. He came by on the 29th, but didn’t give me any money, though I knew it was on his mind by the expression he had on his face half the time he was here. Just few days ago he got a check for $170. I asked if he would meet me at the bank (via FaceBook) so he could endorse it to me, to pay back some of what he owed, and he agreed. Then he comes by my place and said he would be back as soon as he cashed the check. I haven’t heard from him since. I just contacted his girlfriend through FaceBook today and asked when they would start paying me, and am currently waiting for a reply. He has a stable, good paying job so I know he’s good for it. I’m a generally patient person, but I hate being given the runaround. Is there anything else I can do that’s free (I can’t really afford anything)?

    The second issue is a bit older. 5 years ago I gave my sister $660 to hold on to for me so I could afford an apartment if and when I found one (I was living with her at the time, and aren’t that good at saving money). 3 days before I moved I had found out that she spent it all. She says she’ll pay me back for it and blows up whenever I bring up the matter (and I’ve only brought it up twice), but I haven’t seen a dime. I doubt there’s much I can do, since it’s an old matter, but is there anything?

    Reply

    • Probably not worth it to pursue. The best advice is to use this experience as a lesson for future dealings with family and friends.. :/

      Reply

  32. Hello Neal.
    I have a question. Back on June 4th, 2015, I loaned (whom I thought was) a friend of mine $1,400 to pay his rent. He came to me on that day giving me a sob story that he was short this month (June) and needed to come up with $1,400 by the next day or he couldn’t pay his rent. I reluctantly gave him a check for the $1,400 and we talked about payment. He said he wanted to pay me back as soon as he could. The next week, he called me and said that he was supposed to be getting a big raise at work in mid-July and wanted to start giving me $200-$300 a month starting then. I told him that sounded great and took him at his word. Well, since that point, I haven’t heard a peep from him. I attempted to call him on September 4th and October 7th. I had to leave voicemail messages both times. I never got a response either time. I did contact a mutual friend today on Facebook asking them if they had heard from this person. They said they had heard from him about 2 months ago but it was for 5 minutes on the phone. Apparently, everything was fine with this person and even said that I was doing OK even though they haven’t seen or spoken to me since June. I confirmed his phone number with this Facebook friend and it is the same as I’ve been calling so, I know he’s getting my voicemail messages. This person I contacted on Facebook sent a message to this person’s daughter to see what was going on and will let me know if/when they respond.
    SO, I guess my question is: What do I do if this individual doesn’t contact me at this point?? What is the next step?? So far, I have played it cool and have been MORE than patient. The smartest thing I did was I put in the memo portion of the check “Loan for Rent” so that there was no way he could say that it was a gift. Any advice would be greatly appreciated. Thank you, Neal.

    Reply

    • Sorry to hear about all this Brian. Have you tried the steps I outlined in the post? I think they would really go a long way.

      Reply

      • Hi Neal
        Thank you for your reply. I did hear from him shortly after I wrote to you. He paid me $500 at the end of October and $100 on December 2nd. However, I have not heard from him since. I’ve called him 5 times and had to leave 5 messages and gotten nothing. He did say he was going to keep me in the loop on things and keep me updated. I did tell him the other day that if I don’t hear from him by the 16th of January that I would have the Sheriff come to his house because I was really getting worried about him. He never called me. So, what should I do at this point?? Should I send a Certified Letter to his house demanding the rest of the money he owes me or call the police and have them do a “wellness check” on him?? Thanks, Neil.

        Reply

        • If you fear something physically has happened I’d call 911 immediately. I would not do this if this just a ploy to force payment. I would however follow the steps outlined in the post and move towards Small Claims Court. Thanks for the question.

          Reply

          • Hi Neal

            I would have called 911 by now if I thought his life was in danger. That’s why I wanted to do a “wellness check” on him. That way, I can make sure he’s OK first before questioning him as to why he hasn’t been responding to me.

            So, it sounds like you suggest at this point that I just send him a Certified Letter demanding full payment of the balance and that if I don’t hear from him in 10 days that I’ll be filing a Small Claims Case against him?? I also assume that you suggest that I not try to contact him via the phone or any other way except the Certified Letter?? Thanks, Neal.

  33. I’ve loaned $25k to a friend on 5% int to be paid back in full in 6 months. It’s been 18 months. We are in NY, I think we are beyond a small claims court. This was a verbal agreement, although the friend would never deny the facts, I’m still waiting and thinking of some kind of legal action to speed up the repayment. What court should I use? Should I even contact a lawyer at all given my lack of written evidence?

    Reply

    • Jess, sorry to hear about this. I believe the lawyer is the way to go. I don’t know the restrictions in NY – but probably $25k is way beyond the limit. I would for sure call a lawyer. You can still provide evidence I imagine – like a cashed check?

      Reply

  34. i lent my friend $300 and we had a verbal agreement that she was to pay me back 425 and as collateral she was to give me her tablet. I’ve had similar problems with her before with lending her money and her not paying me back. its been 2 months and so far she’s only given me 250 and has been avoiding me. how long do i have to wait until her collateral becomes mine.

    Reply

  35. Hi, Neal. I have two separate occurrences to ask your opinion about. The first occurred about a year ago. I met this guy and we became friends. He asked me to borrow $200 to pay the electric bill where he was living at the time so he wouldnt be without power. He also had me pay for clothing, food, cigarettes, etc for months. His exact words were “im good for my word” and he swore hed pay me back. The total he owes me is $848. At the time he was out of work and claimed that his wealthy uncle was on his death bed and that he was to inherit $200k. I am now sure that that was a huge lie. He has since been back and forth between Kentucky (where I am from) and New York and Arkansas where his mother lives and everytime I contact him about his debt he threatens me. At one point he agreed to pay me if I let him borrow my car to go get the money. I let him borrow my car and he gave me his debit card to go to an ATM and withdraw the money and he refused to go with me and get it himself. I knew this was an awful idea so instead of withdrawing the money I checked his balances on both savings and checking accounts….. $0.00…. of course right? Would small claims court be able to do anything with this case?? I really need to collect here. This has been going on for far too long.

    The second case is with my current boyfriend. He has been out of work for quite a while due to the fact that he is without transportation and the small town he lives in has no jobs to be had. He owes me around $650 total. I wrote out how much is owed and had him sign it this past week in attempt to not make the same mistake twice. If he does not pay and we end up splitting up, what would be the best way to collect in this case?

    Reply

  36. I agree to you also Mr. Neal but I think, We should first talk to them politely who are not responding to us for debt recovery. Because, May be someone has genuine problem, So we need to listen him carefully and handle the situation by offering the good plans for debt repayment. If we will talk with them in their ways they will definitely return payment but some times we should also react harshly with the jerks who always take money and don’t respond. Best of luck for all guys. Thanks !

    Reply

    • David – You make an excellent point. I agree. It’s just that once you’ve heard excuse after excuse, it’s time to get serious. But you are right, if there is a real problem, best to be respectful and work with the person. Thanks!

      Reply

  37. I loaned a guy $500 so he wouldn’t get evicted. I normally don’t loan things but tried to help someone out and do a nice thing. He repaid me by giving me the bird and not paying for a month and a half. Always had some excuse. Thankfully I had had a promissory note signed and promptly turned him over to collections. Its sort off frustrating because it seems like the law favors the debtor rather than the creditor. They have sent letters and called him to no success. They will probably take him to court. Looking back he seems like he knows the ins and outs of the system and will probably find a way to weasel out. Learned a valuable lesson on this one.

    Reply

  38. Hi Neal,

    I loaned an EX $5,000 that he promised to repay with interest in 120 days. I wrote up the contract he stipulated the 120 days terms. of course we broke up, I asked him since we are no longer together you can repay me the $5,000 so i no longer have to deal with this. he says ok, ill see what i can do. this went on for about 5 months I still don’t have my money, he has never given me a date when i can expect my money, and just recently he claimed he would give me $2500 now and the other half later, i said fine sent him a payment request through my bank. he now claims its too much hassle to have to enroll for the service instead he wants to “drop a check in the mail”!?!?!?I know I’m not being unreasonable here. so I have had it, I’m ready to file a small claim. I’m just wondering whats the best way to proceed once I do that? I’ve done it before and I wasn’t able to collect. This time I want all the info I can get to ensure I do collect on this. please help!

    Reply

    • Sorry your ex is behaving this way. I would probably send him a certified letter saying that you are going to pursue legal remedies unless you receive a cashier’s check within 10 days of the date of the letter. If you have a lawyer can send this letter, it will be far more powerful. It might be worth spending a couple hundred bucks to put the fear of you-know-what in this bloke.

      Does he have the money to pay you think?

      Reply

  39. girl fiend borrows money from her mom to help use out of debt her mom tells her to get me to sign a payment agreement and to hand over all the money to me,my girlfriend get the money spend it on some other thing then our debt then tells me cause i took care of her for 4 yrs she is going to pay off the mother but if i could pay the interest of the loan till she starts her new job. she got fired so for 3 yrs i paid the loan to go ahead we broke up her mom asked her how she was going to pay the loan she said not me but joe is a nice guy he will not screw you I told her I can help her till she is off her feet she move to another state . i was told the card was for her mom’s loan so i would put the min payment in 1 day the atm would not take the money i went in to the bank they told me i can not use someone else’s card i said it was for a loan payment they said it was for a checking account call the ex girlfriend that she need to start paying her mom back she told me not her problem that it is mine now

    Reply

      • Sorry for taking so long to get back, bottom line is I never signed anything to my girlfriend at the time to give the money back to her mom.
        It was 56k she spent 18k of the money so far I paid 18,900 back to her mom but ask for a copy of the loan and every monthly statement but they will not send it.Her mom said I only been paying interest and I still owe her 38k and her daugther will pay the 18k she spent.
        Call a friend to go pull up the county record on the property and there is no loan or leans.Point is I pay my debts but do want to be taken if it was her personal money she is trying to charge me interest the I did not agree on.

        Reply

  40. Neal, my husband and I hired a guy to do some handyman/carpentry work. This was a handshake deal. We asked us to pay him a $1000. upfront, so that he knew we were not crooks. We asked him to work 5 days a week. He agreed and said I can even work 7 days a week. Well needless to say, we held up our end of the deal, him, no. Half a day here and there. His girlfriend covers for him in everything. From screening his calls to cashing his checks. We didn’t know this until we were ‘into it’. We divided up his $1000. into 2 $5oo.oo checks. I left the ‘pay to the order of’, blank, but in the memo spot I put down labor. His girlfriend filled her name into the pay to the order of and endorsed the check. If that legal? Second of all, the little amount of work he did was not worth $1000.00. Can we recoup half of the money? And do we have any recourse against her? What if he comes back and says he never got paid?

    Reply

    • I would try . Also, sounds like you might call the police on both of them because this might be fraud. What have you tried so far?

      Reply

  41. Hi Neal, I live in Las Vegas and 2 years ago almost to the day June 9th 2011 I loaned my best friend over $3000 to pay off all her pay day loans because she lied and told me her husband was threatening to leave her and take her child which he never was. She agreed that she would pay me back 60 dollars every month until it was paid. In the 21 months that she has had to pay me she has only paid me $700 of the $3415. The money I gave her came out of my disability back pay. I fought for three and a half years with the help of Binder & Binder to get on permanent disability, after 33 surgeries in18 yrs my doctor finally said no you cannot ever work again, its too much, you need to be on permanant disability & stay home take care of yourself and with his help all the way thru I won. She knew my back pay was coming hecause she was my best friend of 20 yrs. I’m 37 & on disability, she knew how much I needed that money paid back. I’ve had 6 additional surgeries since I was put on disability and countless visits to the hosp. and she kept saying if I had the money I’d give it to you, she would never have the money she gambles everything away. The only reason I helped her was because she lied to me and told me her husband is going to take their daughter which he never was, I spoke to him, and he told me they would pay me every month. I don’t have it written but I have all the text messages saying I’ll pay you here and I can’t pay you this have to pay you this day etc,. I have everything going back 2 years I have where I asked her to put something in my account because I had $157 that was it and had to last me a month. I asked very nicely in a text and she came back and bit my head off like a black widow and then she said I want to start keeping track of what I still owe you. It took you TWO YRS to care? You should have been keeping track the whole damn time! I went into my credit union got a printout of exactly how much money I took out and how many times money was actually put back into a specific account so I have the proof in the two years she’s only paid me back $700 of the 3000 and we got into this huge fight because I asked her to provide me the names of the payday loan places and how much each one was individually and she said that’s not what I asked you why are you being so rude you always make it about you and whatever BS. She got mean. She asked so I said here’s what you paid me and here’s what you still owe me and I have two checks right on them it says loan. I have all the text messages & the receipts the two times they paid with a check. Here’s the thing she can’t pay me back but she can go buy a new car and throw a huge birthday party for her daughter and oh yeah they just bought a new house. Husband brings home 2 grand a week she brings home that much every two weeks and they can’t afford to pay me 60 dollars a month?  I’ve been told to go to small claims court to get my money and now she’s pregnant. I’ll never see my money if I don’t do it now. I need to know if I have all the text messages if I have the exact amount taken out of my account and she has the names and places of all the payday loan places with the exact amount each one that was paid that day, I’m on video on every one where she paid. I need to know with my text messages especially of her saying I know I should have paid you more over the last 2 years asking you to borrow money was the biggest mistake of my life, please tell me I have enough to prove that she owes me the money because I am on disability and she took complete advantage of that. Yes I got my back pay it wasn’t a whole lot of money I paid my parents first because they took me in and have been taking care of me I cannot take care of myself. then I had to go to the dentist pay 10 grand to have all my teeth pulled because I had an infection so bad to the bone it would have killed me in 10 days I also had to pay 3 grand for the anesthesiologist so the money did not go to shopping trips or new cars or anything else it went to things were absolutely necessary for me and she guilted me into giving her that money and now because I called her on the carpet she’s turned around and made it beyond personal. I do have psychiatric diseases I do have depression I do have anxiety to turn it around and just be mean to blame me? I have all the receipts she just put in $40 yesterday not 60 now she put it down to 40 I never agreed to that and I want my money. She is no longer my friend and she never will be again. So please tell me 2 take her to small claims court and get the money I desperately need for another oral surgery which I don’t have dental insurance to pay with, its all out of pocket. Thank you

    Reply

  42. Hello,
    I loaned a friend in the military 1762.5o, which he refuses to pay me back. I have notifies his Commanding officer and now he has been calling and texting me saying that his job wants a signature and notification that he owes me the money. I’ve kept all the text messages of him saying he will pay me back and copies of the money grams that were sent to him. Will that be enough??

    Reply

  43. hi neal i had a room mate ( my cousins wife he had passed away rented a 2 bedroom & split bills. she was always late with her 1/2 rent bills but thats not the problem. she made charges on 4 of my credit cards for $5000.00
    i took her to small claims court & won the case in may but she still has not made any payments. can i sue her again for all the interest & late fees (35$ a month per card ) it totols over 5 grand. now i find out her wealthy motherassed away ( s telling people not to tell me ) causees been running from me she is to inheret 1/3 of 1.3 million w do i get my money please help thank you happy thanksgiving

    Reply

    • I will have to research this – which I will – and then write a post about it. But I do know from my own experience if you have a judgement and the other party doesn’t comply you should be able to place a lien on the property. As I said, stay tuned. I w/look into this…..

      Reply

  44. Hi Neal,

    I was dating/slash helping out a guy for about 5 1/2 months. I paid for his airfare to move from FL to NY, he stayed at my house for that duration. He did not have much clothes, so I purchased him new clothes (on credit), particulary for job interviews and work clothes. There were other expenses such as phone bills and other utilitiy expenses, and in total everything added up to over $3,000. He verbally agreed to pay me back when he started working out of his first paycheck. He only had his 1st job for two weeks, but he gave me $300. I have a banking statement where I made a deposit of $300.00 he gave me out of his first paycheck that went towards him paying me back, but he fradulently took my debit card,withdrew the money from a local ATM machine (which I also have documented on my banking statement). Unfortunately I only have a contract that he signed for a smaller portion of the amount owed at $465. He refuses to sign any other additional contracts for the total amount owed. I have receipts that back up my claims in total. Also I plan to obtain a notorized letter from my mom (as landlord of the house) that the guy was living there while I was paying rent and utilities. I was wondering if I have a case with the receipts for the expenses incurred, as well as obtaining a notrized letter?

    Reply

  45. Hello Neal. My husband and I find ourselves with financial difficulty due to his disability. I loaned a “friend” $3000 about 8 years ago, which she promised to repay within 60 days. After she cashed the check, all contact stopped. I know she also suckered many others into loaning her money at that time. I just learned she spent time in jail in 2012 for writing bad checks close to $10K, and must make restitution. I am angry now that she only got worse with her spending habits and screwed a lot of people. I want my money. She nor her husband will answer phone calls or respond to letters. What is the best way to pursue this? She is in PA and we are in ME, otherwise I’d be knocking down her door. I know my chances are slim, but just the thought of her looking over her shoulder thinking I am pursuing this may give me satisfaction. Can I at least put a lien on her property or something? Maybe someday they will sell their home and I will have that judgment. Whaddya think? Thanks.

    Reply

    • Jillybean, I am sorry that your kindness has been repaid with such terrible behavior. The best situation would be for you to walk away and move on if possible. You can pursue it but you will incur more costs and frustration. And you still may not get anything in return.

      If you want to pursue it you can look into suing in small claims court but I don’t know how that is done if you are in another state. This

      Reply

      • Thank you Neal, figured it was a lost cause. I will write her husband one more time now that I know she was in jail and perhaps he will be shamed into paying up, but he let her sit in jail without bailing her out, so probably won’t happen. We were tight friends once, maybe he will have mercy. Thanks again, and will let you know if any progress or response happens.

        Reply

        • I’ve had to go thru this myself a time or two. My experience is that I’ve already lost the money – why lose my serenity too? I am sorry this happened but I suggest you not loan to friends again – ever again – unless you can afford to lose it. That’s been my strategy.

          Keep me in the loop and good luck…

          Reply

  46. I wish I had the problems of the folks above. $1,000 here – $2,000 there. I sold my business and the buyer took a personal loan from me to do it. She ended up just walking away – owing me $50,000 and leaving me with her rent and bills. I need the “right” collection agency for this – that’s what I’m trying to find.

    Reply

  47. also, I do still have his storage key, do you think if I just go to his storage and get whatever to secure if he doesn’t pay me back. will that illegal? will I be in trouble for that?

    Reply

  48. hi Neal, I need help, my friend got arrested Feb 2012, and just got out on Oct. 2012. when he in jail, I was the one pay for his lawyer fees and book money also storage fees. but the problems there is not paper agreement between us due to he is in jail. Now after he is out, he just did not mention anything about to pay back. also we got in to big arugement, which will not going to talk in person anymore. but most of the fees mentioned above is from my credit card, but some are cash. will you think is okay for me to file a claim base on what I have in hand? what should I do? please help!!!

    Reply

    • Kat, I am sorry to hear about this. It may be possible to use Small Claims Court. I personally would not waste much time other than using Small Claims. I do not think it would be wise to simply take what he has in storage. Also, consider if you really want to have any business with this person. You might want to just cut your losses and move on.

      Reply

  49. This was an excellent article to read, I felt very empowered by it. Sadly this has happened to my “emotional” behind twice already by (2) different friends, both named Michael…oddly enough. One owes me $200 from (2) years ago and one owes me $455.00 going on (6) months now. The latter I had sign a promissory note that listed his truck as collateral should he be unable to pay me back. That note was also notarized.
    I have a question in regards to the $200 loan that is owed to me. He lives in Tampa, FL now. When I loaned him the money we were both living in Palm Beach County, FL. Two years later and he still lives in Tampa and I live in Colorado Springs, CO.
    Where should I find an attorney to write the letter for me, which city is best to do this from?
    Any help you can give me would be greatly appreciated. I am sending a copy to your FaceBook as well.
    Thanks again for all your informative tools, you’ve given me the boost I need to stop playing Mr. Nice Guy and get my money back.
    warm regards
    Armando Diaz

    Reply

    • Armand. Thanks for your kind words and sharing your story. I am sorry that your friends let you down. That sucks. I like that you are going to stop playing Mr Nice guy. I would have a policy of no more loans to friends. Have them go to others or even turn to Lending Club. But to your question – I fear that the cost of having a letter written by an attorney would be more than the possible return you will get if your friends pay up. This strategy works but I think it works better with larger amounts. Still, you can try to contact Legalzoom.com . Either way, don’t despair. If you learn the lesson and don’t fall for this trap again it will be worth far more to you than the $200. On the note that is collateralize with the truck, have you placed a lien on the car?

      Reply

      • Neal! Thanks for the prompt response! Really made my day. To answer your question… NO I have not placed a lien on his truck. The truck was a gift to him from his grandfather. To be honest I think he’s driving around in it with fake plates and no insurance. I’m not even sure he has transferred the title over and I do know for sure he doesn’t have any insurance on it. He carries around this personal injury insurance for himself. That’s all I know. The truck is a 1994 Dodge.

        Reply

  50. i get a kick out of all the sites that tell delinquents how to avoid collection and how to charge the collector with harassment . this makes me sick ! Pay ur bills and this wouldn’t happen . I personally have given up on collecting all the personal loans owed to me AND will spend my $ on revenge . I will drive them completely nuts without them knowing where it is coming from . SO if u owe me $ u will wish a collection agency was handling this when i am done . good luck losers 🙂

    Reply

  51. I have a car loan out to my sons roommate- he sold the car and took my loan money for the car and spent most of it on his credit card bills ect… Stating he did not know it was to be repaid when he sold the car. He lives in Arizona, I live in Minnesota. If I went to small claims court what state do I file in? Mn and Az have different limits for small claims. My son and he are no longer roommates. Give me some advise on how to handle this. Thanks

    Reply

  52. These are excellent ideas on collecting debts, Neal. I’m happy to read that it is easy (relatively speaking of course) to collect debts in the US. In Malaysia where I live, it takes forever and a day to do so even when you go to court.

    As a result, I came up with the perfect loan plan – do not lend money! Firstly, it’s not your job to lend money. Secondly, if you really want to help, just give, don’t lend.

    By treating the money as a gift, it’ll save you from the burden of getting the money back and your friend from trying to find the money to repay you. Of course, you only give what you can afford, and not necessarily what he is asking for. The bonus of doing this is that both of you will remain as friends.

    Reply

  53. Mr. Neal, I find myself in a situation that pertains to what you have broken down on this page. I lent a friend a total of $2000 so that he could further pursue a business venture of his. This was done in a personal manner and was no way an investment through his company. He needed the capital and I lent it to him on a personal level. I had him e-mail me a contract stating the amount and the said due date for my money to be returned to me. It has been several months now past this date. He has made several promissory dates based on certain monies that were to be coming to him that he would then pay me back on those dates. Contact on his end has decreased and I have not heard from for over a week now. I have several e-mails and text messages along with the wire transfer receipts for the money that I sent him regarding this matter. Seeing how the non formal way of handling this manner is not working, what do you suggest I do from here? Do I have enough backing on my end to take it to court? Any advice would be greatly appreciated.

    P.S.- There was to be interest paid on this money as well and is that something that I should not concentrate on? Or just worry about the principle amount?

    Reply

  54. Hey Neal, I really need your advice. I’m a former college student who quit the university on my second year when I got dismissed, and went to pursue something different. I didn’t apply for health insurance, or lived in the housing when I left, yet they still charge me for student service fee, housing fee, health insurance fee and campus based fee, and it’s total up to 7k. I already canceled my housing when I left but they didn’t notify me that I have to write a letter to remove me from the contract. I don’t if they still charge me for the terms when I wasn’t living there. They’re just trying to make money off of me, do you think it’s wrong for them to do this even though I didn’t use these? They even referred to the collection agency to force me, but I got nothing. I don’t even want to pay for that crap that I didn’t apply for. Mark what is your advice? What can I do to drop this? Have you ever been in this situation?

    Reply

    • Dave,

      You have to prove to them that you notified them of your status change. If you can not prove that you gave them written notice, you will have your work cut out for you. I would simply go talk to the housing department. Be nice. Never display anger. Politely ask to speak to the manager and work your way up to each higher level at the school until you get to the Dean. I am sure they will want to be fair. Let me know how it goes.

      Reply

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