This pandemic is choking everyone. We get that. Now that you’re losing money, getting hold of the cash you’ve lent before and during the pandemic seems timely. With just one catch, the people who owe you are part of your inner circle. They’re either friends or relatives who by now may have forgotten about it all. A few hundred is forgivable but what if the debt runs to the thousands. You simply can’t let it go, right?
First and foremost, you need to avoid situations like these. You may want to help your friend. But history has shown many clueless individuals who lend money end up losing goodwill. Luckily, there are tried-and-tested ways to go about getting your money back. But you got to be careful here. Getting the money back and maintaining the relationship is hard. It’s a tightrope act. The right strategy should be able to help you. Then again, if everything fails, calling in the big guys may just be the right thing to do.
Protect Yourself: Don’t Put that Burden on Your Shoulder
First up, the good news is you’re not alone. In fact, government data shows about $89 billion gets loaned between families and friends. Said data was the product of a survey by the Federal Reserve Board.
Often times, many of these friendly transactions turn sour. It is advisable then that when you lend money to someone you know, you should treat it as a business transaction.
In this regard, before you lend money, it’s best you talk about repayment terms. Also, do your due diligence. Ask around about the person wanting to borrow. If it turns out that a person’s character elicits red flags, say no politely. Being able to deny a borrower friend is a big step towards complicating things later on.
Then again, you should look at your own finances. If you’re barely getting by, there is no reason at all to compound your situation by lending money. On one hand, help your friend find an alternative option to raising money. For one, doing a garage sale or directing him to a rich friend is wise. And if you really want to lend him money, put it all in writing. That should include the amount and repayment dates.
Bringing Your Money Back
Collecting the money owed is another story. If you haven’t read it, you should. We’re referring to the federal government’s guide on how to conduct yourself when collecting your due. To make it simple, there are certain things you cannot do to someone who owes you money.
When a debt is due and has been unpaid for some time, you got to proceed with caution. Applying aggression is the last thing you want to do. If you do use verbal abuse, you might need to escalate things to prove your point. Instead, your negotiating skills should come in handy here.
Be persistent and be firm. It takes patience to get back what is rightfully yours. To get the things in motion, remind gently. However, be straightforward. Ask them when they can repay. You can schedule payments in smaller amounts if money is scarce.
Then again, if the money owed is huge, you can always rely on the services of a debt collection lawyer. Unlike a collection agency, a collection attorney can sue an errant borrower. Overall, these lawyers have far greater success in collecting debts than collection companies.
Nonetheless, before you call the big guys, assess the situation first. A small debt shouldn’t warrant the action. The power of legal action should be used only if all else fails.
A lawyer is a shot in the arm too. Consulting one is wise. He can give you timely advice on how best to proceed without losing a good old friend.
You could be putting undue pressure on yourself when you lend money to someone you know. Make sure you do it right. The same holds true when collecting a debt from such a transaction. Your judgment really has to work here. When you follow the right path, you could put yourself out of unnecessary complications. And live happily ever after.