Navigating the Uncomfortable: What to Do When Friends Don’t Repay Borrowed Money
Many of us have found ourselves in the uncomfortable situation of lending money to a friend only to have them fail to repay it. The lesson learned is clear: if you borrow, you should pay back. However, when the words “if you can’t pay back, don't borrow” don’t carry enough weight, what steps can you take?
1. Understanding the Challenge of Verbal Loans
A large sum of money is a relative term. In the case of lending money to a friend, the lack of a formal agreement can make repayment more challenging. Verbal loans, often referred to as handshake loans, often lack the official documentation needed to enforce repayment. The absence of written proof, such as notes, emails, or formal contracts, makes these types of loans particularly difficult to recover.
2. Communication and Setting Boundaries
When lending money to a friend, it’s important to communicate clearly and set boundaries. If you find yourself in a situation where a friend has borrowed money and hasn’t repaid it, addressing the issue directly can be a step forward. However, the approach should be handled carefully to avoid escalating tensions in an already strained relationship.
It is often helpful to remind friends of the debt. You might say something like, 'I really need the money back as I have some pressing expenses. Can we work out a repayment plan?' This approach demonstrates your understanding of the situation and your willingness to discuss a solution without blaming them.
3. Seeking Professional Advice
If you find that verbal reminders and a friendly conversation are not effective, seeking professional advice might be necessary. If you know someone who is an attorney, consider asking them to draft a formal letter reminding your friend of the debt. This can add a level of seriousness to the conversation that a casual request might lack.
4. Filing a Small Claims Lawsuit
Another option for those who have substantial evidence of the loan is to file a small claims lawsuit. Small claims courts are designed to handle disputes of a smaller amount of money and aim to provide a simpler and more accessible legal process. Ensure you have all the evidence, such as text messages, emails, or witnesses, to support your claim.
5. Moving Forward and Learning from the Experience
Ultimately, not all loans are repaid. The key is to learn from the experience and move on. If the relationship is already severely strained, addressing the issue might not mend the relationship but can provide closure. It’s important to reflect on why you lent the money and whether the person was a suitable risk. This can help you be more discerning in the future.
Do not continue to loan them money or keep calling and pestering. Instead, accept that the lesson has been learned and focus on moving forward and improving your financial situation. Be careful who you lend money to in the future and assess whether the person is a good risk before making any further financial commitments.
Remember, while it’s important to address financial issues, it’s equally important to prioritize your mental and emotional well-being. Moving on from a situation where a friend hasn’t repaid you is a step towards resolving the issue and living a happier, more fulfilling life.