If you or your business has made small loans, you expect those people to pay the loan back in a reasonable amount of time. Unfortunately, it doesn’t always happen. Then, you have to figure out how to get your money so you’re not just giving it away. Here’s what to do when someone owes you money.
1. Call the Debtor
Before you do anything else, contact the person about his or her debts. If you’ve sent invoices and reminders, then pick up the phone and ask about what’s going on before jumping to conclusions. Once you figure out the situation, decide the best course of action.
2. Offer a Debt Repayment Plan
Hopefully, this person wants to pay you back as quickly as possible, but maybe is having a bit of trouble coming up with the money. Working with them to come up with a repayment plan can help ensure you get your money back and they don’t go into more debt trying to repay you. If you already had a plan in place, working to restructure it without involving lawyers can be helpful for both parties.
3. Send a Letter
If this person still isn’t repaying their debts, it’s time to start getting serious about demanding the money. Send a letter with facts about the loan, payment agreements and dates. Outline your expectations about when the money will be repaid. If necessary, hire a lawyer or process server to write and deliver the collection letter.
4. Collect the Debt
Unfortunately, you may need to take some drastic measures if you aren’t getting your money. Handing the debt over to a collection agency, going to small claims court, or even to civil court if it’s a large sum of money. Many times, just being contacted by a debt collector is enough to scare someone into making their payments. If you do have to go to court, try to also recoup your court costs.