Everyone, or at least most have been in a situation when a casual friend or a family member asks for money to settle their personal financial setbacks. People resort to debt when things get rough and immediate solution is needed. And for someone who has some extra cash to lend to, it is oftentimes easy to provide the money, especially if it is for a friend or a close relative. However, the conflict arises when the owed money have seemingly slipped through a person’s mind and magically have forgotten to pay off.
What to do now?
How will you talk to them without offending them or discuss repayment without creating a rift between your relationship? (because here in the Philippines: Kung sino pa ang nangutang siya ang galit.)
Letting the debt slide is not and should never be an option because most of the time, allowing non repayment of debts results to people’s worsened debt behavior.
Let us help you in finding the right words and strategies to ask someone to pay up.
Here are some pointers that you can do to make your debt collection trip easier.
But before that:
Let us first discuss some important things that you may want to consider before lending your money to someone.
- Assess whether to say Yes or No – before saying yes to someone, you should first ask yourself if the current financial situation of the person can make up for the borrowed amount. Moreover, you should also assess the underlying effects of the loan to your relationship, particularly if non-payment happens. Knowing your friend or relative’s behavior and financial background will help you in deciding whether to allow a debt or say no.
- Always have a Contract – Legally binding forms of transaction must always be present. A black and white agreement and terms can really save the day in terms of payment tracing and evidence when things get serious. Remember, some people may tend to have amnesia during collection period, they may forget that today is the due date, they may deny the amount borrowed, they may even deny that they’ve borrowed. So, without a written statement of debt terms and agreement, these scammers may easily slide out of collection. Thus, it is important to write the debt down and make sure that you have witnesses.
Now, how to collect debt effortlessly?
We don’t want to feel guilty when the collection time arrives. It is truly difficult to see someone close or just somebody struggling to get things settled. So, here are some ways to get your money back and not feel bad about it.
1. Remind them of their debts (but, in a friendly way)
Most people tend to react violently to an unpaid debt. Don’t do that. Arguments start in initiated heated response towards debt collection.
What you can do and should do is to try reminding someone that you need the money back on this date. Always make the notification a week or two before the deadline, this will enable the person to grind and gather the money before the payment schedule.
Persistent and firm communication is the key, make the person think that you really are serious on getting the money back. Don’t hesitate or in filipino “magpaligoy-ligoy pa” as much as possible, be straightforward – say “How are you? So, about the money you borrowed last time, I am just wondering when I can ask you to give it back” or “Remember the money you asked last week? I really need the money back because…”
Expressing urgency is also another way to politely remind them of the money. Giving reasons why you need the money back together with the reminder, disables them from thinking of reasons to slip through the schedule and will give them a sense of resolve to pay.
2. Start with Updates
If you feel that being straightforward still rude, then you can start the conversation in asking for updates of the progress of the activity that the person told you as a reason for needing the money.
For example: if the person borrowed the money for his or her children’s tuition fee, you could say: “How’s your children? Have they successfully taken the examination…?” or if they asked money because someone is sick: “Is he/she okay now, what did the doctors said?” after these words, if the answers give you positive vibes, then you may proceed in reminding them about their due date and tell them that you understand the situation, but you also have needs to address.
3. If you can, Offer payment in portion
Small steps are still steps. If things are really bad for your friend, but still, you need the money back, you may ask them to pay in portion or in installment scheme. Giving this consideration is also allowing both parties to meet halfway. You helped them escape the debt loop gradually, and you’re collecting your money too, little by little.
4. See if your friend has an item to act as payment instead
Your friend is literally cashless at the moment and by cashless, it means that you cannot demand monetary payment. Instead, ask them if they have something at home, with the same value to be considered as payment. Maybe a Television set, air-condition, their refrigerator or a brand-new phone. You may not receive the exact money that you’ve lent but the silver lining there is that you’ve received valuable items in return which can be sold in a garage sale and the profit goes directly on your pockets.
5. Invite someone over lunch, dinner, or drinks
This method depends on the amount of money borrowed. If the person owes you just right for a buffet treat, or Korean barbeque, samgyeopsal all-you-can, then trick them in repaying by actually treating you. A few beer will also do the magic. Go out with your friend, eat, and drink and enjoy and when the bill was given remind them of their debt and ask them to pay for your meal instead. You may also want to go out shopping and ask the person to pay for you. Smooth and convenient cashless shopping.
6. If all else fails, go to court
Believe me, the last thing you want to do is to take the legal way of debt collection. This action may settle the amount due but will surely put an end to a relationship. But don’t be guilty, it is never your fault. Nonpayers are toxic friends, and we don’t want to have one. So, how do this right? You may want to seek assistance on the Barangay level first. The chairman with his council will try to mediate and organize a payment pattern for both parties. If, even with the reorganized payment system the Barangay suggest does not make the person pay the debt, you can now write a complaint on the city or provincial court, the court will send a sheriff to collect the payment or to also suggest another payment scheme. If possible, scamming or fraud exists, the court will immediately consider the action as a criminal case, Estafa.
Read more about governing laws about civil debts: May Nakukulong bas a Utang? Charges and Constitutional Limitations of Not Paying Debts
If someone is good at convincing people to lend him or her money, the lender should also be smart in collecting it. You should treat every loan whether a friend or a family loan a business transaction. You might feel the urge to help or assist your struggling mate, but you must consider the fact that you may not feel good when you come to realize that the help did not made its way back to you. Hence, to avoid that, you must make it a point that a loan is a loan, a loan is a responsibility, and a person must abide to that responsibility. Perpetually plant this in your mind, you have the right to be paid back and if that never happen, or if someone planned to not make it happen, those tips above can really make the statement. PAY UP, you say PAY UP it is.