No one is an island, they say. We need each other’s help. Financially, this assertion is more practical. There are different types of personal loans, you can look at some at online. For different reasons, people borrow from one another. It could be in times of emergencies, whether they need it as business loan or whenever there is any need for cash.
The only problem is that sometimes lending money to family members and friends end up destroying the good relationship existing between the parties. Which brings us to a common but important question – Can You Sue Someone for Lending Money? If indeed it is possible, which steps can you take? Do you need to consult a legal professional? Well, this discussion will address such questions.
Can You Sue?
The answer to the question is “yes,” though it depends on the lending process and the terms of borrowing. An agreement is legally binding, if the two parties place their signatures on it. If you lend legally and in writing, you can sue someone if he or she defaults. So, if a friend owes you money and aren’t willing to pay, consider filing a complaint, and they may be compelled to repay. Nevertheless, you should know that filing a lawsuit can be more complicated than you may think. Also it is important to remember that the court can never take the responsibility of collecting the funds for you. That will always be your obligation. You will only be granted the legal right to receive payment from the other party.
The Process of Taking Legal Action
Sometimes it is good to give borrowers some extra time to obey their obligation. Maybe they are just having some bad times. However, once it becomes clear that they are not willing to repay, and you decide is to file a lawsuit, the basic requirement, and the process is always the same, though certain aspects may be different contingent on the one that court one is using.
Here is a general outline, but be sure to check with your individual state for jurisdictional requirements.
Preparation is very important and
may involve the following basics
- Select the right court.
It is important to file a complaint in the court with jurisdiction over the condition that led to the emergence of the claim — meaning choose a court that has power in the area that you are filing. You often have an option of filing the suit through small claims court. Nonetheless, these courts have a maximum amount that you can sue. Importantly, the court that has jurisdiction is the one in the nation in which the disputed happened.
- If you have a signed a written contract, then you should sue the person in the country where the agreement was made and signed.
Additionally, you can also sue in the country where the defendant lives. In other words, you have the choice between different courts with jurisdiction over the matter. So, you can select the more convenient one and suit your condition.
- Collect evidence.
You must be able to prove that the defendant owes you to recover the money. A written contract is an important part of the evidence. In some cases, individuals lend via handshake deals, and this makes it difficult to prove that the defendants really owe them. Also, be ready to deal with the assertion that the money was a gift and not a loan.
- Compile all the necessary
information about the borrower.
You should ensure that you are suing the right person. This involves using the true legal name as well as other basic elements. For instance, if you reside in community property, and the borrower is married, you are liberty to sue both members of the couple. Additionally, you need to have the exact address where the person can be sent the legal notice. Lack of this information means you may be unable to complete the lawsuit.
- Ensure you are within the statute of
There is always a deadline beyond which you cannot sue the borrower or recover the loan amount. The limitations may be based on whether you are owed under a written or oral contract. In the former case, you may have up to 10 years. In contrast, an oral contract is only enforceable for up to two years. The duration starts from the time the contract is breached. So before filing the claim, examine the statute of limitation.
- Consult an attorney.
If the amount owed is significant, and you are confident of contesting the claim, seek the advice of the attorney and know how to go about the matter. Some attorneys provide free consultations, and it is very important to have a legal opinion. If the attorney is of the opinion that you may not be able to win, reexamine your options.
- Provide a demand letter.
In many states, it is a requirement
that you provide evidence of a written demand to the borrower prior to the
filing of the suit.
Complete and file the small claims forms
There are forms that you will be required to file in preparation for a claim. Again, seek help from a legal advisor. Plaintiff’s claim form and defendant form are all required to be filled.
Present the forms to the clerk of the court, and your case will be filed. Importantly, you will be required to submit a fee for the claim to be filed, unless you ask for a waiver. The clerk will let you know the exact court date. In case you do not understand English, let the clerk know, and an interpreter will be made available for you. Alternatively, you can come with one yourself. Ensure you are present in the court, and do not forget to carry your papers. Failure to appear may lead to dismissal of the case. Plan what you will say in the court, including a precise explanation on why you chose to file a claim.
It is possible to sue someone who owes you. However, the process may be lengthy and complicated. In this discussion, we have discussed the basic steps you should take to prepare and file a claim in the court. Make sure you are lending money legally, and it will be easier to get legal help if the borrower defaults.
As always, if you have legal concerns, consult a legal professional with your questions.