Does A Relative Owe You Money? 3 Things You Should Know

3 November 2015
 Categories: , Articles


Lending money to a family member might seem like the right thing to do when your relative needs financial help, but this transaction could end up causing problems later on. Family loans can be hard to collect, in some cases, and they can cause family divisions if the collection of the money turns into a problem. Here are three things you should know about family loans and collecting the money that is owed to you.

What Is The Chance You Can Collect The Money?

When you give a loan to anyone you know, you may expect it to get repaid, but is the person capable of repaying you? The answer to this question will help you determine how to handle this problem.

If the relative that owes you money has no money to use to repay you, collecting it with any method may prove difficult. A person cannot come up with money if he or she has no job, or if the person has nothing to sell. Trying to collect from a person like this may be almost impossible, even if you really need the money repaid to you.

On the other hand, if the person has money and is spending it on other things, he or she probably has the means to repay you. If this is the case, pursuing the money is probably a good idea.

How Can You Pursue Collecting The Money?

There are several options you can use to try to collect the money owed to you. The first option is to simply ask. The relative might not think you really need the money right now, and he or she might simply be waiting for you to ask. While this can work in some cases, it is not a method that generally works out for the lender's benefit.

If this option does not work, you could pursue collecting it by taking your family member to small claims court. You will only be able to use this option if the amount owed is less than the maximum amount allowed in your state's small claims court system. Every state has a different amount, and the amounts are between $2,500 to $15,000.

If you can use this option, it might be worth a try. You will have to pay a fee to file a claim, but the fee is not usually a lot. If you can prove in court that the person owes you money, the court will place a judgement against the person to pay you the amount owed. The person might also be required to pay additional fees, such as the filing fee amount for the court appearance.

The downside to this is that a judgement does not instantly make a person produce the money. This person might not care about having a judgement and may do nothing about it. In this situation, or if the amount owed is higher than the maximum amount allowed in small claims court, you could consider hiring a family lawyer to help you collect this debt.

A family lawyer may suggest sending a formal letter to the relative demanding the money. A lawyer could also prepare an actual case to take the relative to court to collect the money.

Is It Worth The Fight?

Finally, you should consider whether collecting this money is worth the fight and problems it might create. Family issues can be some of the worst issues to deal with in life. If you can live without the money, you might want to forgive the debt and move on. If you cannot live without the money, your best option is to talk to a family lawyer to find out how to handle the case.

If you would like to learn more about suing a family member, contact a lawyer like those from Bayer Jerger & Underwood.