Most people assume that debt collection is something only businesses have to deal with. In reality, it is quite common to lend someone money yet fail to recover payment. Often, you let it slide because it is a personal loan extended to a friend, family member, or colleague. But you do not need to bear the losses of an unpaid debt. There are many ways by which you can collect a debt without running the risk of damaging relationships. So, how do you tread the fine line of collecting a personal debt?
Stay in contact with the person who owes you money
The person who owes you money may feel embarrassed if they cannot pay, but this is not a reason to stop communication. Through communication, you can perhaps come to a more favourable agreement that will work for both of you. Be specific with the payment terms and send gentle reminders from time to time. If you intimidate your debtor, they will likely avoid you, which leads to more problems over time.
Resort to mediation
When all your efforts to collect payment have failed, the next step is to consider enlisting the help of other people. One of the least aggressive options would be mediation. A mediation service is less expensive and will not stress out either of the parties. Through this process, both sides can air any grievances and potentially resolve the issue.
Hiring a debt recovery agency
Although a debt recovery agency may be considered as a last resort, there are instances when they can provide the necessary solution to recovering a personal debt. Debt recovery agencies employ strategies and methods that have proven successful. Another benefit of this method is the opportunity to enlist the help of a professional to act on your behalf. Since you are collecting a personal loan, it is best not to get too involved, especially when emotions are running high.
Hire a solicitor
If you prefer a more direct approach to the matter, you can hire a solicitor. However, taking legal action could damage your relationship with the person who owes you money. As such, you may want to consider and exhaust all available options to recover the money before hiring a solicitor. Nevertheless, a solicitor can help ensure that you get paid and guarantee that you are always following the law.
Seeking legal help is the last step before filing a claim in court. If all else fails and you are already under a significant amount of stress, then a claim may be necessary. But you also need to consider the amount of time it takes to resolve a case as well as the considerable cost of litigation.
Conclusion
Personal debt is like any other obligation. As the creditor, you have the right to employ whatever means necessary to recover your money. Regardless of if it involves close relations, you can resort to the methods explained above. In the end, it depends on how far you are willing to pursue your debtor and to what extent you are willing to engage the help of experts in collecting payment.
