What To Do When Someone Owes You Money

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We all know that money is a crucial part of our existence and there comes a time when we are in hard times and we must borrow some money to get by. 

On the flip side, you might be doing fine this month and someone is in that situation – you lend a hand (and some cash) to help out, but now you’re not getting the money back! 

Now, this can happen between friends and family and that’s a horrible situation to be in, but it can also be from businesses that owe you money – and to some extent, that’s even more frustrating!

In today’s guide, we’re going to talk about what you should do when someone owes you money including friends and family but also some businesses and organisations. 

A Friend Or Family Member Owes Me Money 

The problem with lending money to friends and family is that it can become a wedge that keeps you both apart for many years, and it makes situations between both of you awkward. In fact, in some situations – it can completely ruin your relationship. 

So, what can you do? 

Well, it’s important first that we talk about the way you should lend to someone. Before lending money to anybody, it’s important that you get it in writing (think about an episode of Judge Rinder!). 

The issue with this is that you don’t normally create a formal contract with friends and family. You trust these people and you expect them to honour their payments.

The fact is though, sometimes people can change or feel awkward because they fall into further financial trouble. 

This doesn’t help you though, you’re now short of money because someone else promised it back! Let’s start with what you should do if no contract was made. 

Nothing In Writing 

When you lend money to somebody and there’s no evidence in writing of this, it can be difficult for third parties to see the terms of the loan. Basically, if you’ve not stipulated when a payment needs to be returned, in essence – that could be loaned for years. 

The best thing you can do is contact the person you have loaned the money to. Try to remain calm, even if you’re in financial trouble. It’s unlikely someone will pay you back if you’re screaming down the phone. 

Ask them about their situation and when they might be able to pay you back. It’s a good idea if you can, to get them to agree to this in writing – but sometimes they will feel awkward by this too. If they agree to a deadline or a payment plan that suits you, fantastic. 

If however, they’re completely ghosting you or refuse to pay back – or deny that it was a loan in the first place, you’ll need to move up the situation to a service called mediation. 

Agreement In Writing 

If the person has actually signed a formal agreement with you, this makes matters much easier. There is an admittance of the loan and likely a date to be repaid.

Your bank statements will be able to prove that the money was not returned, and if they claim they paid in cash – their statements will need to prove this. 

In any case, if they are still avoiding you or refusing to pay – mediation is the next step.

What Is Mediation?

Mediation acts as an impartial party to listen to both sides of a conflict. Think of them as a referee in sports. Mediation services are easy to find using the Civil Mediation Website.

Be aware though, that these services often charge fees but they’re so much cheaper than hiring a solicitor or moving to a small claims court. 

Mediation will aim to make an amicable solution, but if it cannot – you may need to step up matters to court. 

Court Action 

Court action is normally when mediation has failed or refused. The more evidence you can provide to the magistrate, the better your chances are of the court ordering the repayment. 

In this situation, you can apply for a CCJ (County Court Judgement) if the debtor does not attend the hearing, or they may be found guilty in their absence.

The next step is to apply for a High Court Judgement, but this will incur much larger fees – however, the agents work much more quickly.

An Official Demand 

If the debt is less than six years old, you can make a statutory demand for your money back. Ignoring this can allow you to force bankruptcy or liquidation of a business (if applicable). 

What If A Business Or Organisation Owes Me Money?

Many of the previous steps will still apply but there are other things to include depending on what business it is. 

Travel agencies or energy companies that owe you money are generally regulated and it’s worth speaking with the regulator (like OFGEN or ATA) before you go into further action. You can also speak with the financial ombudsman service if you’re getting nowhere. 

If a financial institution like a bank owes you money, you can speak with the Financial Conduct Authority. Whatever the case, you’ll need to keep all evidence including emails, copies of letters, telephone logs, text messages and live chat logs. 

It’s important too that you include during any action, additional costs that have been incurred to you as a result of their negligence. Such as credit card fees, overdraft charges etc. You may be entitled to receive this back. 


Nobody likes being owed money and it’s never nice when it’s friends and family that owe the money to you. 

The best thing you can do is try and liaise with the person that owes you money and build upon your relationship in future. However, sadly – this won’t always work. 

It’s useful though that if you choose to lend in the future, you get an agreement signed by both parties including the amount to be repaid, the date it needs to be repaid and your full names and signatures.

Ensure you have their contact details too! 

Related: Can Anyone Transfer Money To A GoHenry Card?

About Emma Healey

Emma is a recognised family finance and budgeting expert and founder of Mum's Money. Her advice has been featured in Readers Digest, Yahoo Finance, Lifehacker, The Simple Dollar, MSN Money and more.