Recently on our legal forum a user asked, “I borrowed $5,000 from a friend three years ago. A few months later I lost my job and got evicted from my apartment. My friend’s been pretty cool about the debt, but he wants the money back. What legal options does he have to force me to pay the debt?”
Loaning money to a friend
Most money experts will tell you never to lend money to a friend. Not only can it potentially ruin the friendship or at the very least make things awkward between you, even with the best intentions circumstances may arise that make it impossible for you to ever repay the money.
It sounds like your friend has talked to you and despite your willingness to repay the debt you simply don’t have the means. Now let’s assume you’ve tried a variety of options to resolve your debt problem: you’ve put yourself on a budget, you’ve ask another friend or family money to loan you money to repay this loan or you’ve tried to get another job and save money to repay the loan.
If you’ve exhausted all of your options it’s time to face the reality that your friend may decide to sue you in small claims court. Let’s take a closer look at what legal options he has to get repaid.
How to sue in small claims court to recover a debt
One of the simplest ways to resolve financial conflicts for small sums of money is to sue in small claims court. Small claims court allows both parties to present their evidence and have a judge, who is considered a neutral party, decide who owes whom. Small claims court is also inexpensive, the suit can be brought without legal representation, and the decision is issued quickly.
Let’s take a look at the steps your friend can take to sue you and recover the debt payment:
- Identify the defendant
Before a claim is filed your friend (the plaintiff) will need to identify the defendant. Although your case is clear cut and you are clearly the defendant, other cases may require the plaintiff to identify all the parties that might be liable.
- Ask for payment
Before filing the case the court will expect the plaintiff to send a demand letter. A demand letter is a short, clearly articulated letter demanding payment. In many situations the demand letter may be sufficient to resolve a dispute.
- Identify what court to file your claim
Regardless of where the case is initiated, the plaintiff will need to find the appropriate small claims court to file the claim. Cases can be dismissed if they are not filed in the right court.
- Fill out the court forms
Each state and court will have specific forms which need to be completed to initiate the claim.
- File the claim
After your friend has completed all the steps outlined above he can file the claim against you in small claims court. He will have to pay a filing fee and turn in all the appropriate forms. He will then be given a court date.
- Serve the claim
After the claim is filed, notice of the claim will be served to you. After you have been serviced you will know what your friend is demanding and when and where the trial will be held.
- Go to the trial
It’s important that you attend the trial. You need to bring any evidence that you have that would justify not paying the debt owed. Unfortunately, given the information you presented, it sounds like you had a valid loan agreement and you know that you owe the money. With this in mind, it’s likely the court will find in favor of your friend and issue a judgment against you.
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