Got a friend who owes you money that always seems to “forget” to pay you back? It happens.
If you’re anything like me, you’re probably starting to get frustrated about this. You so generously extended your grace toward this person and now they’re turning their back on you when it’s pretty obvious they have the means to pay you back.
So what are you supposed to do?
Here’s the short answer: If you’ve already given diligent effort to resolve things with this person, it’s best to just forget about the money and move on. However there’s always the option of going to small claims court if the amount in question is large enough. Letting yourself be consumed with hatred does nothing to increase your odds of getting your money back, but makes your quality of life much more miserable.
First things first: Don’t lend money to friends or family
My rule of thumb is don’t lend friends or family money (and definitely don’t cosign a loan with them either).
I don’t care if they’re your closest friend or a close family member or promise on their mother’s grave that they will pay you back. Don’t lend friends/family money. People will say anything and manipulate anyone they know to get cash if they’re desperate enough.
This might sound harsh or maybe you’re starting to think I’m telling you to be stingy, but here’s the deal: whenever you bring money into the picture with friends or family, it changes the dynamic of the relationship.
In theory, if everything goes well and all payments are made as agreed upon (which often doesn’t happen), everyone’s happy and goes on their merry way. However, when payments start being missed or your friend seems to keep “forgetting” about the money he owes you, things start to change.
You’re going to start having that money pop up in your mind every time you see or even think of that person. After a few weeks or months of no payments, it’s going to make you question their character or their integrity as a person. On their end, they’re going to feel the constant shame and guilt of not being able to pay you back when they see you (if they’re decent people). Alternatively, they’re going to get annoyed that you keep pestering them about this “small” amount of money.
Boop, there goes that relationship.
The two options I (and Dave Ramsey) recommend you consider are either generously gifting the money with no strings attached or not giving any money at all. When you limit yourself to these two choices, two things happen: 1. It preserves the relationship you have with this person and 2. It ensures you won’t risk losing money you can’t afford.
One exception I would have for this rule is if you are entering into a business relationship or some sort of formal financial exchange of goods/services. In that case, I would get everything in writing so you can have some documentation to legally protect yourself if things turn south. Even then, be very aware of the possibility that they simply won’t pay you back.
So we got that out of the way, but I’m guessing you didn’t come here just for life lessons. Let’s get into what you can actually do about this debt you’re owed.
Strategies to come to an agreement
Be nice, but firm
“Be nice” sounds kind of manipulative, but it’s true (and a good principle to follow in general).
It’s all about maximizing your odds of getting paid back. It’s going to be tough, but put aside any ideas of unleashing your “righteous anger” upon them or getting petty with them. Being nice maximizes your chances (but doesn’t guarantee) that they will work with you to pay you back.
It’s much easier to get someone who likes you to cooperate than someone who hates you. How do you get people to like you? Being nice is a start.
If you get hostile, there’s always the risk that they’re going to just “disappear”. That’s going to be game over for you.
At the same time, you want to be firm. You will want to set clear expectations that you’re serious about the money and aren’t going to let this slip through the cracks.
Leave them a Venmo request
If they aren’t going to pay you back and they’re a venmo user, at least they will have that reminder stuck with them so you can be sure they won’t “forget” about it. Venmo even has a “remind” feature to let you bother them if it’s been a while since you’ve made the request.
Let them come up with a solution
Work with them to come up with a plan they can commit to. Generally, if people feel like they’ve participated in forming a plan, they’re more likely to follow through on it. Otherwise, you’ll just be like Trump asking Mexico to pay for the wall.
If they are scratching their heads trying to come up with something, here are a few ideas you could suggest:
- Come up with a debt repayment plan
- Find out if they can pick up a side hustle for some extra cash
- Set deadlines and follow-up expectations
Most likely, they’re just going to say “I’ll pay you next week”, which of course isn’t going to happen on it’s own. If anything, that’s just something they’ll toss at you to make you stop bothering them.
In that case, it’s going to increase the odds of them following through if you can get them to list specifics. How are they going to get the money? What expenses are they dealing with right now? Is a payment plan an option? What should you do if they don’t pay you back by the deadline?
If possible, get all of this in writing just in case they want to dispute what you two agreed to in the future. Maybe even consider recording the conversation if you’re feeling super paranoid. In the event you want to take things to the next level, this is going to be an important piece of evidence to help your case.
Take them to small claims court
Let’s be real. If it’s come this far and they still haven’t paid you back, they have no intention of ever paying you back. It might be time to play hardball.
You can actually sue this person to get your money back. You might even end up on an episode of Judge Judy.
If the amount in question is more than the minimum amount set by your state and you don’t care about burning bridges with this person (or bridges have already been burned), this might be worth pursuing. You’ll also want to check if the time, stress, and legal costs are worth the amount in question.
This is usually viable for documented cases of money/services transactions like getting back a security deposit or getting a business partner to pay their fair share. This might not work when you “lent” a friend money to get them through a tough time and they’re not paying you back. In that case, it’s going to be hard to prove that this is a loan instead of a gift.
I’m not a lawyer, but make sure you have a strong case to present other than “he said he would pay me back”. Pieces of evidence like receipts, invoices, time stamps, lease agreements, etc. will definitely be strong points to convince a judge that you’re in the right here. You might even consider getting a lawyer’s help.
Assume the money is gone
Life is like chess. There are no take-backs. Your opponent capitalized on your mistake and now you’re losing the game.
“Lending” the money in the first place was your first mistake and there’s no surefire way to dig yourself out of this hole. Your money’s long gone and your relationship with this “friend” has changed forever. Unfortunately, you’re stuck in this situation and sometimes there really is nothing you can do to get yourself out.
In most cases, the money is simply gone and there’s nothing you can do about it to “force” them to pay you back.
For peace of mind, just forget about the money and spend your resources on other more important things in life. If it helps make you feel better, you can think about that money as an “investment” to never have to see or deal with this person again.
Worrying and stressing about it for months on end does literally nothing to increase your chances of getting your money back. You’ve already taken reasonable action to get your money back from this person, so there really isn’t anything else you can do. There’s no need to go through all that unecessary stress for no reason.
Alternatively, you can transfer that hatred into a side hustle to earn your money back in your spare time. Kind of like an evil villain who gets rich so they can eventually get revenge on the hero.
In most cases, that money isn’t going to be significant enough to seriously affect your long-term financial health. Don’t waste any of your resources on the 1%. Focus on the 99% that’s actually going to make a difference in the long term.
I’ve done this once and you won’t believe how much of a relief that was.
While there are certainly strategies you can try to get someone to pay you back, there’s no guarantee that they will ever pay you back. That’s why you should never loan money to friends/family in the first place.
Depending on how big the debt is, you always have the option of small claims court if you have proper documentation of the debt. If it’s just a handful of dollars, there’s probably not much you can do.
This might not be what you want to hear, but sometimes it’s best to just forget about the money. If this person has no intention of paying you back, you’re not going to get your money back. End of story. So your next best move would be to let go of all the hatred, worry, and anger and move on with life.
I guess you could get petty and foot them with the dinner bill or eat food from their fridge, but that’s up to you to decide if you want to stoop to that level.
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