Where’s My Money?

Here is a common call I receive: a friend asks for money for the down payment on a car and promises to pay you back as soon as they can. Being the loving and caring friend that you are, you immediately loan the money, confident it will come back in due time. After all, you’ve known your friend for years and trust them, and you wouldn’t expect any less. But as the months go by, you still don’t see a dime come back. You’re nervous about asking for the money, but you really need it back. Yet, you don’t want to harm the relationship.

So what do you do?
How do you get your money back and maintain the friendship?
How do you deal with a friend or family member who won’t pay you back?

Loans can ultimately sour relationships, and many friends and families have fallen out over this issue. By not paying you back, they have broken a trust, which is very difficult to repair. First, be prepared to lose them from your life, at best for a short term and at worst forever. Secondly, there are some ways to deal with them as you are attempting to get repaid. This is what I call the “high road” to getting repaid.

  1. Offer Gentle Reminders
    Sometimes this is all it takes. Perhaps the person has so much on their mind that they forgot about the loan. Consider sending an email or visiting him. If your friend or family member has a good sense of humor, make a joke out of getting your money back. Humor can lighten the mood. However, make sure you communicate how important it is to you to be repaid.

  2. Suggest a Payment Plan
    If your friend wants to pay you back, but cannot pay the entire lump sum at once, suggest a payment plan. Sit down with them and write out the terms and conditions for the payments, including how often and how much. Establishing structure to the loan will benefit both of you. When deadlines are clear, it’s easier for your friend to be held accountable to them.

  3. Offer to Help Figure Out Finances
    If your friend or family member is willing, help him review his finances. If he does not manage money well, suggest that he make a budget or help set it up. In this way, you both can see how much he can afford to pay you back each month.

  4. Get Collateral
    If your friend or family member truly wants to pay you back, but lacks the discipline to do so, ask for collateral. Something they won’t want to do without, like a TV or iPad, can be a good choice. You are not to return the item until they pay you back. Such an action gives them incentive to pay you back sooner and proves to you that they genuinely intend to follow through with the promise.

  5. Visit in Person
    Perhaps your friend or family member is avoiding you because they know you want your money back. If they don’t respond to emails, texts, or phone calls, visit them in person. Be kind when you visit. Show them that they can’t avoid the situation and offer suggestions that they can implement to pay you back.

  6. From here, if they continue to be negligent, you may have to either gift them the money and work it out on your taxes. Or, you may just have to chock it up as a loss and lesson learned. However, at this point, you at least know you have done everything you could to recover your money. The healing you go through from this betrayal will be accelerated if you take the high road.