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Collecting Debt from a Close Friend

Posted on in Debt Collection

Collecting Debt from a Close FriendYou likely will not need to file a lawsuit against a friend who keeps forgetting to pay back the $20 he or she owes you. Refusing to repay $20,000 is a different matter. Some people do not lend money to friends or family because they want to avoid an awkward situation where they have to pressure these people to repay them. However, it can be difficult to say no to a friend who is having a hard time paying for basic living expenses or needs financial assistance to start a business. You will decide whether to hold your friend accountable for the debt, but you should know that you have the same debt collection options as other creditors.

Written vs. Oral Contract

Illinois law enforces both written and verbal contracts, but a written contract is more concrete evidence in court. It is prudent to write down an agreement for a sizeable loan, even if you trust the person. With the written agreement, you can:

  • Prove that your friend agreed to repay the loan;
  • Set a deadline for repayment; and
  • Establish what action you will take if your friend does not repay the loan.

A court will likely uphold an oral loan agreement, as long as you can show that you gave the money and your friend benefited from the money. However, an oral agreement has a five-year statute of limitations in Illinois, as opposed to a 10-year statute of limitations for written agreements.

Avoiding Court

Filing a lawsuit against your friend will irrevocably change your relationship. You should tell your friend that you want to settle the debt without having to go to court. Persist in asking them to repay the loan without being rude or threatening. Document your conversations with your friend and send written correspondences, in case you need to use them as evidence in a lawsuit. If your friend does not have the money to repay you, work together to create a repayment plan that he or she can afford.

Filing a Lawsuit

Your friend may force you to take legal action if he or she:

  • Refuses to honor your agreement;
  • Seems capable of repaying you but has not; or
  • Disputes the amount he or she owes you.

A Chicago debt collection attorney at Walinski & Associates, P.C., is best suited to handle a delicate loan disagreement between friends. Our lawyers can discuss your options for enforcing the repayment of the debt. To schedule a consultation, call 312-704-0771.

Source:

https://wealthpilgrim.com/personal-debt-collection-collecting-money-owed-you/

Illinois Creditors Bar Association Chicago Bar Association Illinois State Bar Association
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