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This article was co-written by Clinton M. Sandvick, JD, PhD. Clinton M. Sandvick has been a civil litigation attorney in California for over 7 years. He received his J.D. from the University of Wisconsin-Madison in 1998 and his PhD in American History from the University of Oregon in 2013.
This article has been viewed 16,225 times.
It’s easy to lend money, but sometimes it’s hard to get it back. And at such times, you should not feel guilty about debt collection: it is the other person who broke his promise. Regardless of the cause of the loan, there is always a way for you to handle when someone owes money and won’t pay it back. Sometimes, just a gentle reminder is enough. However, being willing to increase the intensity of your actions will help you achieve your goals and reduce unnecessary distractions.
Steps
Debt payment request
- Consider loan value. A small debt may not be worth insisting on immediately, and a larger debt may take a long time to collect.
- If someone owes money for a business transaction, claim it as soon as possible. Waiting only makes things more difficult. [1] X Research Source
- Instead of asking for payment, remind the person (“Do you still remember the money you have?”) to save face.
- Provide all relevant information when inquiring about the debt. You should be ready for a reminder of the amount lent, when the final payment is received, the amount owed, any loan agreement you are willing to accept, contact information, and a deadline. Clear payment.
- When dealing with a company or client, a formal letter can be helpful. That will be the written evidence needed when the situation escalates.
- With a maturity date, usually 10 to 20 days from receipt of an offer is a reasonable timeframe: not too long, but not close to causing panic.
- Do not accept negotiations too quickly, because in many cases, that will be a signal that the debt can be negotiated, or that the borrower may even extend it for more time. [2] X Research Source
- The language used should be more direct and show some urgency. Phrases like “You need to pay now” or “We need to reach an agreement on this” will show the borrower that you are serious and not willing to negotiate.
- When requesting, state the consequences of non-payment. Let the other party understand what your intentions are and be ready to implement them.
- If the cost is too high, you may want to consider skipping this step and going to the competent court.
- Calling at the wrong time;
- Additional fees incurred;
- Deliberately collecting money late to increase fees;
- Disclose information about the debt with their agency;
- Lying about money the person owes;
- Making bogus threats. [4] X Research Sources
Arraign
- If sued, prepare for your trial. If you have a contract, promissory note or any other document to prove it, have enough copies available for the judge and the debtor or their representative. Do the same for any other supporting evidence.
- This can be a very drastic step. Make sure the debt is worth the hassle of appearing in court. If the other person is a friend or relative, this step will definitely have a negative impact on your relationship.
- Considering court and attorney fees, this option is often more expensive. But if it’s successful, it’s probably worth choosing over a debt collection service. [6] X Research Sources
- Threatening lawsuits may have been enough to get someone to pay. However, you should not threaten if you don’t really mean it.
- At trial, you should ask for the defendant’s right to forfeit wages.
Get paid
- If you have to sue and hire an attorney, you should consult with them to take the most reasonable steps.
- Each locality has different wage forfeiture laws and so make sure you know the laws of your place of residence. [7] X Research Sources
Advice
- Don’t feel guilty about reclaiming what’s yours. You do not swallow. The borrower did and you have every right to get it back.
- Remember to stay calm and don’t let yourself get upset. New debtors should be upset because they have not fulfilled their repayment obligations. Be firm but polite. It will increase your chances of success.
- If payment is extremely difficult for an individual or business, be very cautious when dealing with them in the future.
- Keep all paperwork on file during recourse, especially if you have to go to court. With business transactions, keep legal records when possible.
- In this article, the debt collection process is presented for informational purposes only. Remember that each type of paperwork that needs to be completed can vary widely and follow a heterogeneous process. Do your due diligence before filing a lawsuit or hiring an attorney.
- If you own a small business or are an independent contractor, you may need a different approach when dealing with non-paying customers.
Warning
- If you’re in the US, with business debt, make sure you go through the federal Fair Debt Collections Act (https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair- debt-cplection-practices-act-text) and any other applicable laws. Otherwise, in the end, you may end up being the guilty one.
- Be careful about disclosing to anyone that he or she has not paid you, because you may be charged with slander or libel, as the case may be.
- If the debtor files for default, you must stop collection efforts immediately to avoid default and government collection laws.
This article was co-written by Clinton M. Sandvick, JD, PhD. Clinton M. Sandvick has been a civil litigation attorney in California for over 7 years. He received his J.D. from the University of Wisconsin-Madison in 1998 and his PhD in American History from the University of Oregon in 2013.
This article has been viewed 16,225 times.
It’s easy to lend money, but sometimes it’s hard to get it back. And at such times, you should not feel guilty about debt collection: it is the other person who broke his promise. Regardless of the cause of the loan, there is always a way for you to handle when someone owes money and won’t pay it back. Sometimes, just a gentle reminder is enough. However, being willing to increase the intensity of your actions will help you achieve your goals and reduce unnecessary distractions.
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