When someone takes out a personal loan, it’s under the assumption they will repay it in full by a set date. Unfortunately, some people default on their debts. Is there anything you can do to get back the money owed? Keep reading for your rights when collecting a personal loan.
Before resorting to mafia movie tactics, you need to know the law. The Fair Debt Collection Practices Act (FDCPA) limits what people can do to collect money owed. According to FDCPA guidelines, you can’t stoop to abusive, unfair, or deceptive practices. So, what are your options? Understanding these debt collection rights will ensure the other party repays every cent.
Right to Request Payment
You have the right to request payment from whoever owes you money—plain and simple. After all, the borrower promised to repay you from the start. Lenders can demand payment via telephone or mail. To stay in accordance with the FDCPA, only call the debtor within regular business hours, and only send mail via certified letter for proof of delivery.
How can you protect yourself from dishonest borrowers? Always get a signed promissory note before any money exchanges hands. Also called an IOU, this legally binding document is a written promise to repay a loan. It should set out the terms of the loan, including:
- Names and addresses of both parties
- Total amount borrowed
- Amount and frequency of payments
- Signatures of both the borrower and lender
Collecting a Personal Loan: Right to a Debt Settlement Agreement
Not everyone defaults on a personal loan due to bad character. Sometimes, people just fall on bad times. As a lender, you have the right to adjust the loan’s original terms with a Debt Settlement Agreement. This agreement lets you change the total amount owed or the repayment timeframe. Of course, amending the debt is entirely up to you, and this option is not a requirement when collecting a personal loan.
Right to File Suit
Some borrowers might still refuse to repay the loan, no matter how nicely you ask. Luckily, you have the right to sue the debtor, but this isn’t something you should tackle on your own. It’s always best to contact an attorney. After ignoring your initial demands to pay, a debt collection lawyer will file suit on your behalf when collecting a personal loan.
Cases with a signed promissory note in hand are the strongest to prove. The other party can’t dispute the details of the signed document, and a full trial with a jury isn’t needed. Your lawyer will motion for a summary judgment to speed up the process. Instead of dealing with a long, tedious trial, the judge will issue a decision quickly. In addition to the initial loan amount, the judgment may also include interest and legal fees.
When Collecting a Personal Loan Get Help from a Debt Collection Attorney
A fair judgment often depends on qualified legal representation. For more than 30 years, the legal team at Howe & Associates has represented clients in a variety of debt collection cases. We’ll guide you through the entire process and keep your best interests at the forefront. It’s our goal to get you every penny owed.
Ready to take the next step in the personal loan collection process? Schedule a free consultation to discuss your collection rights with our legal experts.