How easy it is to get your money back from people you thought you trusted depends on the conditions of the loan and if you wrote down the particulars of the loan (which most people don’t seem to do!).
These tips apply to money lenders who put their agreement in writing, as well as those who thought putting it in writing was “rude” because it indicated lack of trust.
Here’s what a reader says:
“My boyfriend and I have been helping his son as he could not seem to find work,” says S. on Should You Lend Your Adult Child Money? “He has been borrowing to the tune of about $6,000. Now he has a job, has been working for approximately a month, has gotten an apartment and we need to know when to ask for this money back. I want to nip the issue in the bud and let him know that he needs to start paying this back next month, before he decides he can start buying toys! How do we get our money back?”
Brush up your persuasive techniques! Seriously. Learn how to get people to say “yes.” A great resource is The Science of Influence: How to Get Anyone to Say “Yes” in 8 Minutes or Less.
I have good news and bad news about getting your money back after loaning to people you thought would pay it back…
How to Get Your Money Back After Loaning to People You Trust
I watch Judge Marilyn Milian almost every day (the beauty of working from home as a writer and blogger!). She always, always has friends and family members suing each other to get their money back. And, most litigants (the people who sue) say, “I didn’t put anything in writing because I trusted him to give me my money back.”
And Judge Marilyn says, “You know what we call people like you? Litigants!”
No matter how much you trust or like someone, loaning money is a minefield. Like politics and religion.
Get your agreement in writing now – it’s not too late!
Did you write down the particulars of the loan? You don’t need a notary to make it “official” or a lawyer to make it “legal” – all you need is a short statement that has the date of the loan, amount of the loan, what the loan was for (optional), and payment schedule.
Whether or not you’ve written down the particulars of the loan, you should write an email that begins with:
“Congratulations on your job and apartment, Joe! We’re proud of you. We believed in you, and hope the $6,000 we loaned you was helpful.”
You need to establish in writing how much you are owed, and how much you trust him to repay it. Your stepson doesn’t have to sign an official agreement or promissory note (though that’s the best way to get your money back after loaning to someone you trust).
Ask for your money to be repaid in installments
Don’t expect to get your money back in one big payment! Joe probably won’t have the whole $6,000 immediately, unless he just received a huge lump sum from a tax refund, insurance settlement, or family inheritance.
Here’s more of the email you could write to your stepson (or whoever owes you money):
“We don’t expect you to repay the whole $6,000 immediately. Would monthly (or weekly) payments of $400 (or $100) work for you? If not, let us know how much you can afford to pay.”
If you have a pre-existing written agreement for money loans between relatives or promissory note, you’re in an excellent position to get your money back.
Threaten to take them to court – Judge Judy or The People’s Court
Here’s a great story from a college student who borrowed money from her relatives. She describes how they “made” her pay them back:
“I went to Italy with my grandparents while I was in college. I had enough to pay for half at the time we booked, and they said I could pay them back for the other half as I could. I was a college student waiting tables on weekends, so I paid them back slowly. My grandfather asked me when he was going to get the rest of the money, and if he’d have to take me to Judge Judy. And I don’t doubt that he would have sued me on TV to get his money back! I immediately took the money out of my mutual fund for school, and paid him back. It was $500 and I lived across the street from him. He was going to get his money!”
Don’t expect to get your money back after loaning it – even to people you trust
I hate to say it, but the best way to keep your friend and family relationships smooth and happy is to expect that you’ll never see your money again. If you keep nagging them to give you your money back, you’ll create resentment and rifts. You need to find the balance between gently reminding them that you want and need your money back, and letting go of the expectation that you’ll ever see it again.
Getting your money back after loaning to relatives requires a bit of finesse. Read How to Convince People to Say Yes – 5 Persuasion Techniques for tips on convincing them to pay the money back sooner, not later!
What do you think – how would YOU get your money back after loaning it to someone you thought trustworthy?