If you loaned money to someone and they don't pay you back even after you've repeatedly asked them to, your best course of action is to take matters into your own hands and go to a small claims court to sue them for the money.
No, the police will not do anything about your claim that somebody owes you money. To get the police involved you would first have to prove your claim in court and then get a court order to retrieve some property; in that case the sheriff could come and help you enforce the order of the court.
You have no risk of any criminal prosecution. It doesn't make any difference what happened subsequently; in order to prosecute you, you would have had an intent to not repay at the time you borrowed the money. And, that was not the case so you have no need to worry.
A long time ago, it was legal for people to go to jail over unpaid debts. Fortunately, debtors' prisons were outlawed by Congress in 1833. As a result, you can't go to jail for owing unpaid debts anymore.
Depending on the agreement you have, you may not have to pay back the money you borrow from family or friends. If you are paying them back, the interest rate they would charge you is typically much lower than what you'd get from financial institutions.
Unless the matter also involves violence or an immediate threat there is really not much that the police can do for you if someone owes you money on a loan.
Essentially, you might think suing someone with no money is futile, but that's not the case. The law protects your rights and allows you to seek compensation if someone causes you harm or loss, regardless of their financial status.
WRITE A LETTER TO THE PERSON WHO OWES YOU
If the person who, for example; owes you money refuses to pay, they should then be sent a letter of demand which indicates all the facts and the specific amount you are claiming. The letter must be delivered in person or by registered mail (the Post Office can assist).
Write a demand letter
In the letter, explain to the borrower that they haven't repaid the loan as promised, and they need to do so. Give them a time limit to respond. (Be reasonable.) Explain the consequences if they ignore the letter.
Conclusion: Going to small claims court may be worth it for $500, but it will determine how you weigh your costs versus benefits. At a minimum, it is worth it to send a demand letter.
Yes, text messages are admissible in court, but only if they were legally obtained. This means a person must voluntarily provide the court with the text messages.
Send a Demand Letter
A demand letter often signals to the debtor that you are serious about pursuing the matter legally. "Discover your rights and legal steps for recovering unpaid debts. Explore further in our detailed blog: Money Not Returned Take charge of your financial situation now!"
It's possible to serve jail time if you've failed to pay your federal taxes or make child support payments. You can't go to jail merely for owing credit card, student loan, personal loan or other types of debt, which we'll explain below.
You are able to sue your friend if there was a clear expectation you lent them money as a loan that had to be paid back within a certain time frame and that time for repayment has passed.
If you truly have no assets and limited income, you might be considered "judgment proof." This means that even if the other party wins the lawsuit, they may not be able to collect any money from you. However, being judgment proof doesn't prevent the lawsuit from proceeding or a judgment from being entered against you.
Although it might be tempting to ignore a summons and complaint, ignoring a lawsuit does not make it go away. And it could result in the court awarding a money judgment against you by default. That can lead to your wages being garnished, your bank accounts attached, or your property being taken!
You can only file in small claims court if the amount owed to you is under a certain dollar amount. The maximum amount varies from state to state, but it's typically between $2,500 and $25,000. If the client you're suing doesn't show up in small claims court, you will win the case by default.
It is a civil matter, not criminal, so the police are not going to get involved. You have to sue and go after her and get a judgment. If she does not pay, you can then enforce it and go after money or assets.
You may want to get legal advice from an attorney with experience in collections matters. They may be able to help you decide if you have a civil case worth pursuing.
If you find think the person that took your property committed theft, file a police report. The police may be able to investigate and help you recover your property.
According to the IRS, you can only gift an annual amount of $15,000 per individual without having to pay gift tax. So, if you loan someone over $15,000 and they don't pay it back, it can be considered a gift and create tax complications.
If things don't work out even after serving the Letter of Demand, one is advised to file a suit. A creditor can commence civil proceedings against the debtor for recovery of debt. This approach is financially viable when the owed amount is substantial and the debtor possesses the means to repay but refuses to do so.