Someone showed me a social media post the other day that said the Philippines is one country where you actually need to explain to someone who owes you money why you need your money back.

That was funny at first, but later, it was not so funny anymore when I realized how many times I’d had to do that myself.  And the worst part?  When you realize that explaining is no guarantee that you will be able to collect on the debt.

Most adults fall into either of these categories: borrowers and lenders, or debtors and creditors.  Some are even in both categories: they owe money and they also have money owed to them.

When borrowing happens between family members and friends, it can be tricky as you skip the formalities of a lending transaction present with credit card issuers, or banks, or lending companies.

If you’ve already lent money and hope to get it back someday, or soon, here are 5 things you can do to help make that happen.

#1 Remind the debtor

The older the debt, the harder it is to collect.  And if the debtor has not mentioned it for a while, it’s time you take the initiative.  Make a call or send a message to remind the lender about the debt.  You can choose to offer a reason why you are making a reminder, or not.  It can go something like this: “Hi, I’ll be needing cash for urgent commitments.  Can you pay me back the P10,000 you owe me?”

#2 Put a deadline

Unless you are okay with not being paid, it is important not only to send a reminder but also to indicate a date when you need the money back.  You can add it to your spiel or text such as: “Can you pay me back the P10,000 you owe me by the end of the month?”  When setting a date, make it realistic and time it around payday or when you know the lender is coming into money like a bonus.

#3 Be open to trades

Some debtors are cash-poor and waiting for them to have the funds may take even longer.  But they may have something else that can settle the debt.  A laptop? A mobile phone? Designer bags? Appliances?  If they make an offer, consider it first before saying no.  Maybe you don’t need the item but it’s a better alternative than not getting paid.  You can always turn around and try to sell the item to recover your cash.

#4 Partial payments are a good start

Be ready for a reply that says they don’t have all the money, but can pay back a portion of it.  Take what you can now, and agree on a payment schedule for the rest.  Some payment is better than nothing.  Say thank you and request for the balance to be paid within the next month or two months, or longer, depending on the amount of the loan.  With a partial payment, you are getting somewhere and that’s a good sign.

#5 Send a demand letter

Let’s hope you don’t get to this step, but some lenders have developed a thick skin and are pretty good at hiding from people they owe money.  If you have a way to reach them, by email, by message, or by visiting their home, do so and try to push for the first 4 steps.  

If no luck, put the debt into writing.  Say you need the money and have been trying to reach them and decided to write to make a formal demand for payment.  There are many templates for demand letters online that you can use as reference.

It does not have to be signed by a lawyer at first, and let’s hope you writing it all down will make the debtor take you seriously.  But if you continue to get ignored, you need to decide whether you can let the money go, or it’s time to seek legal remedies.