Getting Your Money Back: 8 Proven Strategies When Someone Owes You

When a trusted friend or family member owes you money and refuses to settle the debt, the situation quickly transforms from awkward to infuriating. But before you consider legal action, there are several practical tactics to recover what’s rightfully yours. Here’s how to get money back from someone who owes you without necessarily hiring lawyers or going to court.

Start with Documentation and Reality Checks

The first step when dealing with an unpaid personal loan is establishing undeniable proof of the debt. Research from the Journal of Economic Psychology (2012) reveals something uncomfortable: borrowers frequently convince themselves that loans were actually gifts. Your debtor may genuinely believe they owe you nothing while spending freely on luxuries.

Counter this mental rewriting by having a direct conversation. Reframe the discussion clearly: “We agreed you’d repay the money I lent you. That deadline passed months ago, and I need the funds now.” Don’t soften the message or dance around the issue.

If you haven’t already created a written agreement, draft one immediately. Financial coach Dominique Reese recommends framing it as a “good faith agreement” rather than a formal contract—this removes the stigma while making the terms binding for both parties. Write down the exact amount owed, the repayment schedule, and have both parties sign and date it. This transforms a verbal handshake into serious documentation that often motivates payment.

Deploy Technology and Convenience

Sometimes people delay because the logistics feel cumbersome. Eliminate that excuse by making payment frictionless. When you encounter the debtor in person, be prepared to process an immediate transaction using a digital payment tool like Square. Swipe their card on the spot and watch the money hit your account within seconds. Yes, you’ll pay a processing fee (currently around 2.75%), but consider it the cost of closure.

For ongoing arrangements where the debtor needs time, leverage Google Docs to create a shared spreadsheet tracking hours worked, dates, and the declining balance. Cloud-based transparency makes it harder to wiggle out of obligations since both parties can access the records anytime.

Alternative Settlement Methods

If cash isn’t available, get creative. One retired teacher from California decided to count unpaid salary raises as debt settlement—her long-time employee essentially repaid the $1,500 loan through years of “raises” she never formally received. If your debtor provides ongoing services or favors, assign dollar values to each and maintain a mental ledger.

Work-off arrangements are another option. If someone genuinely wants to repay but lacks funds, invite them to work the debt down through services. Maybe they can babysit, run errands, or help with your business. Establish an hourly rate together, calculate the hours needed to clear the balance, and document everything to avoid disputes.

Unlock Cash-Flow Solutions

Stressed borrowers often shut down intellectually and only see problems, not solutions. Reese recommends brainstorming money-making options they might have overlooked. Do they own items they could sell on eBay or Craigslist? Can they liquidate watches, purses, or other valuables?

One creative approach involves hosting a “payback party.” When Reese loaned her uncle $400, he dragged his feet for over two years. During his birthday celebration, she suggested charging admission fees to guests. He agreed, and she recovered the full amount that night.

Escalate Gradually

If the debtor clearly has resources but is simply dodging you, shift tactics. Mention casually that you need the money for personal expenses and may need to ask family members for help. Follow through on that threat. Once word spreads through your social circle that this person owes you money, shame becomes a powerful motivator. Most people feel genuine embarrassment about debt and work harder to keep financial failures private.

The Nuclear Option: Legal Demand

When kindness and creativity have failed, send a formal demand letter via certified mail. A well-drafted letter summarizing the loan details, balance due, original repayment date, and your threat of legal action often works. Include copies of any evidence (text messages, emails, written notes).

According to Matthew Reischer of LegalAdvice.com, demand letters written by attorneys carry particular weight because they signal serious legal intent. You can use online templates for DIY versions, or hire a lawyer for larger sums.

The Bottom Line

Recovering a personal loan from someone who owes you requires a blend of firmness and flexibility. Start soft, document everything, and escalate only when necessary. You’re not being greedy by asking for repayment—you’re taking care of your own financial bottom line, just as any institution would.