How to Collect on a Verbal Loan Agreement

When you have a signed contract, you have a better chance of collecting an outstanding loan. A verbal loan agreement is more difficult to collect, but if you have enough facts, figures, data, and evidence, you can eventually collect the money thats owed you. There are certain steps you will need to take. First contact the debtor and try to work out a repayment arrangement. If this does not work, you may have to seek legal action.

Instructions

1

Gather your facts and evidence. If you dont have a contract, you will need as much evidence as you can gather. Determine if there is a paper trail for the money you loaned. When you go to the bank and get a cash advance on a credit card, the date of the transaction will show up on your credit card statement and the bank will give you a receipt. If you withdrew money from your bank account to extend a loan, this transaction will show up on your bank statement. Recall if there were any witnesses to the transaction. The debtor may have told someone he was borrowing the money from you. Make a note of what the money was borrowed for as well as the date, time, and repayment arrangements.

2

Go to the district court in the county where the defendant lives or where the business transaction was conducted and complete a small claims application. The application will include your name and the defendant's name as well as your version of what happened and why you are suing. Once its complete, there will be a flat filing in the amount of $35, but the amount can vary from state to state and court to court. Verify you claim is within the amount handled by small claims. Some courts have a maximum of $3,000 for small claims and some have $5,000.

3

Wait for the writ of summons. You and the defendant will receive a writ of summons that states you both should attend the trial. The date, time, and location of the trial will also be listed on the summons. The trial is usually at the courthouse. These type of cases are handled by magistrates, which are court-appointed attorneys. Notification will go to the defendant in the form of certified mail with a return receipt. Also note some courts will let you choose from three different methods to have the defendant notified. The first method is having the sheriff department handle it. They will attempt to give the defendant notification, in person, three times. You can also decide to have a private processor deliver the summons. This person must be over 18 years of age. The last method already mentioned is certified mail.

4

Attend the trial and present your case. On the day of the trial you will be able to stand before the magistrate with your evidence and witnesses, if applicable, and present your case. The defendant will also be allowed to present their defense. When everyone has been heard, the magistrate will make a ruling. If she decides in your favor, you will be awarded a judgment. To collect on a judgment you may need to do a bank levy or garnish the wages of the defendant. The court can work you through the steps. They should have the forms you need to fill out. The court cannot collect your money judgment for you.