Debt collection is a complicated process that becomes even more complicated when family is involved. Lending to a family member is a good way of giving them quick cash without worrying about their credit scores or collateral. However, collecting it could result in numerous issues with emotions getting heated and family ties being broken. Having been in the debt collection business for long, professionals at Go Law Offices give a guide on how to go about it while preserving good relations.
Have Open Communication
Open communication is key in any financial situation, even when working with large financial organizations. It ensures you and the borrower are on the same page from the day you give the loan to the day they complete payments. Therefore, ensure you have open communication channels like emails, messages, or calls where you can reach each other easily. Share your concerns and questions calmly and openly and give the borrower enough time and a clear avenue to explain themselves.
Set Clear Terms
In addition to clear communication, you and the borrower should be on the same regarding all debt terms. These include the total amount owed, repayment periods, monthly repayment amounts, interest rates, and penalties. This way, you can record the repayment progress to avoid losing money or making the other party pay more than they should.
Be Empathetic and Respectful
Finances can be challenging and can sometimes tempt you to forget your empathy. When dealing with family members, some can take advantage of the close relationship and ignore payment terms. However, you know your family members best and understand their struggles. Extend some empathy and understand how challenging financial difficulties can be at times. While it is important to remind them of the importance of settling the debt, ensure you understand the situation to maintain your relationship. You can also offer help by airing some solutions to ease their financial burden. These include side hustles they can do or offering a negotiation plan until they can get back on their feet.
Documenting everything throughout the debt process helps avoid future disputes by ensuring all parties are on the same page. Document the terms, amount owed, repayment channels, repayment amounts, and balance. You should also have a collection of all the messages or receipts gotten after the borrower makes a deposit and encourage them to do the same.
Having no boundaries is the number one contributor to failed debt collection among family members. Therefore, it is essential to separate debt-related issues from other personal relationship issues. Do not let your debt affect your family relationships, but you should also not let family relationships ruin your financial health.
Hire Professional Help
If you cannot maintain boundaries and be firm about collecting your debt, the best solution is hiring a debt collection attorney.
These professionals have extensive expertise experience, and materials to help recover as much of your debt as possible. They are also neutral third parties who will not lean on any side, which helps facilitate better communication between you and the borrower.
Use Accusations and Threats
Sometimes, frustration can tempt you to use harsh debt-collection tactics like threats and accusations. That can result in heightened confrontations that could result in physical injury, property damage, and long-term damaged relationships. Therefore, regardless of your feelings, strive to be civil and approach the borrower respectfully.
Involve other Family Members
Involving other family members can humiliate the borrower and strain your relationship unnecessarily. Some debtors can get angry about the involvement and back out on repaying, claiming you disrespected them.
Assume Anybody’s Financial Status
Financial situations can change without warning signs. Therefore, even if the debtor was in a good financial situation before, do not assume they are avoiding payments if they claim to be in a tough financial situation.
Benefits Of a Debt Collection Attorney
Sometimes, as the lender, you might experience challenges asking a family member for your money. While sometimes it might be due to a challenging financial position, it might be because of your family relationship. In such cases, you will experience many benefits working with a debt collection attorney.
While you might consider hiring an attorney an added expense, they will help you save a lot in the long run, especially if the debt is huge. Most debt collection attorneys pay themselves a percentage of the money they recover, so you might not even need to pay out-of-pocket.
Many family members ignore repayments because the consequences of not paying might not be as serious from family members. However, receiving a letter from a debt-collecting attorney will prompt their agency. Debt collection attorneys also understand different tactics that work for debtors with similar characteristics and issues as your debtor.
Higher Recovery Rates
Approaching family members can make them lenient in paying you, which will not be the case if they receive a letter from a professional debt-collecting attorney. The professionals make the collection look more serious, and debtors fear the legal action that might be taken against them. Even if your debtor moves to another state, debt collection attorneys have the technology and resources to follow them and acquire your money.
The frustration of not getting your money back might prompt you to take some actions that might land you in legal trouble. A debt-collecting attorney knows the processes and lines not to cross when collecting debts. This also applies if the person with your money moves. Many debt collecting agencies have attorneys across different locations, granting them the jurisdiction to approach the borrower and collect your money within legal confides. It also saves you the money and time you would have used following the borrower.
Recover Your Debts Within No Time
GoLaw has over six decades of combined experience in debt collection. Our attorneys apply aggressive but legal measures to ensure we recover as much of your money as possible. We also have a network of attorneys across the United States. Visit our offices or complete our free case evaluation form for bookings.