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Lending someone money can be a difficult situation to be in, especially if it’s a friend or family member. Even worse, what happens when that person doesn’t repay you?

If you’ve made the effort to lend someone money, they are probably someone you trust, so it can be difficult to know how to approach the person if they aren’t paying you back. While you want your money back, at the same time, you don’t want to harm the relationship or embarrass the other person.

Here are a few tips to help you navigate the situation when you’ve lent someone money and they haven’t repaid you.

Understand their financial situation

Before you assume your friend or family member is choosing not to pay you back, try to understand their current financial situation. Maybe the loan didn’t help get them back on their feet as quickly as they thought it would. Maybe they still have every intention to repay you, but they just need a little more time. Or maybe they have your money in an envelope waiting for you but haven’t had a chance to drop it off yet.

Before you jump to conclusions, if the person is not providing you with updates on their loan repayment plan, ask them. It’s your money, so it’s your business, but make sure you are respectful and understanding. Before the conversation is over, make sure to ask them to keep you updated so you don’t need to continue reminding them about it.

If they aren’t asking for more money and you don’t immediately need the money back, try to be flexible with what the person’s current financial situation allows for repayment.

Suggest solutions

Maybe the person appears to be making financially questionable decisions, given they still owe you money. Maybe their current plan just isn’t working the way they thought it would.

In this case, before you make assumptions, ask them to tell you more about what’s going on in their life.

By listening without interrupting to share advice, you can get a better understanding of what may have led to the missed repayment and ensure there are no hard feelings. If you do offer solutions, try not to make it about your own need to be repaid and focus on how to best help the other person recover financially. The message will be better received if you are looking out for their best interests.

Add deadlines

While being mindful of their current financial situation, create adjusted deadlines that can help the person meet their loan repayment goals.

Write down a record of when they expect to have the loan repaid and consider breaking it down further by adding installments. Be specific with your records. If you’ve agreed to $150 by the 1st of every month, write it down to hold the person accountable.

Make the deadlines by keeping in mind both your expectations and the other person’s needs.

Look at other options

In some cases, you may start to feel that the loan will never be repaid. Although in hindsight, you’ve learned a lot about to who and how to loan money, you are at a loss.

Rather than continuing to fight the battle and risk further damaging the relationship, you may need to look at other options.

You may be able to resolve the issue through bartering for something or traded services of similar value. If the damage has already been done in the relationship or you can’t afford to not have the money repaid, you may need to take legal action so an attorney can handle getting your money back.

The most important thing is to remember this situation moving forward. In the future, don’t agree to loan friends or family money without signing an IOU form, a Promissory Note or a Loan Agreement.

If you’ve ever been on the other side of this situation, check out our blog on what to do if you’ve borrowed money from friends for more tips.