While it's never a good idea to loan money to a friend, if the deed's been done and your friend still hasn't paid up, you need to take active steps to recoup the money. Since you likely don't want to ruin your friendship, a gentle and honest approach is usually best. Your friend may have forgotten about the debt and simply need a reminder. Threatening legal action isn't necessary until your friend refuses to pay and the status of your friendship is no longer in question.
Step 1
Search any documents you may have created when the loan was made. If you decided to loan money to a friend, you should have drawn up a promissory note that specified how much you were going to loan and the terms for repayment. Without a promissory note, you may have difficulty recouping the money should the case eventually go to court. A review of the promissory note will remind you of the repayment terms and show whether or not your friend has defaulted. If you don't have a promissory note, recall the terms you set when you offered the loan so you can remind your friend what they were.
Step 2
Send a friendly reminder via e-mail, suggests MSN Money. Give your friend the benefit of the doubt from the beginning and assume the debt hasn't been repaid because your friend forgot. A quick e-mail to say hello is in order, with a nonjudgmental note at the bottom that basically says you're not sure if your friend remembered, but the debt needs to be repaid immediately.
Step 3
Call your friend if the e-mail goes unanswered and you still don't see repayment. Tell your friend you're in the area and are stopping by in 10 minutes to pick up a check, suggests Viacorp. This can create a potentially awkward situation for your friend if he doesn't have the money, but it shows you're serious about collecting the debt.
Step 4
Negotiate a payment plan with your friend if she doesn't have the money and the check is not ready. Do this in person when you stop by. Since you want to keep your friendship intact, creating a monthly payment plan shows you're willing to work with her if she has budget and money struggles. Put the new agreement in writing, with the repayment terms and dates.
Step 5
Contact a lawyer if the debt is still not repaid and your friend defaults on your new agreement, suggests Wealth Pilgrim. Since your friend hasn't paid the debt, it's safe to assume your friendship may not be a priority for him. A lawyer can draft a quick letter explaining your intent to seek legal action if the debt is not repaid by a certain date. If the letter is ignored, your lawyer can advise you on proceeding with a lawsuit.
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