Lending money to someone can be risky, especially if no clear agreements are made. It’s important to take the right steps from the beginning to avoid problems later on. Here are some tips on lending money and the legal ways to recover it.
Make clear agreements
Always put in writing how much money is being lent, when it must be repaid, and whether interest will be charged. This ensures clarity and avoids confusion. Make sure all transactions are done via bank transfer, as this helps prove the existence of a loan agreement between the parties.
Be realistic about the loan terms
Consider whether the borrower is capable of repaying the money. Create a repayment plan that is feasible for both parties.
Send a formal notice of default
If the borrower fails to pay on time, send a formal notice of default. This is an official letter giving the borrower a final chance to repay within a specific period.
Take legal action
If payment is still not made, you may consider taking legal action. You can file a claim in court, where the borrower may be legally ordered to pay the debt through an enforceable judgment.
