Someone owes me money and has been ignoring me and my messages whenever I reach out. Now the fact that you’re reading this post means you’re probably in the same boat. In the Philippines, one of the most dreaded words is “utang” or borrowing money. But for some reason, it’s also a practice that most individuals can’t avoid doing. While there’s nothing inherently wrong with borrowing money (professionals take loans every time), the problem arises when you lend people money and then they unknowingly or intentionally skimp on the payment.

They say, when you let people borrow money, you should be prepared to lose a part of yourself when they don’t pay it back. For this reason, it’s advisable to only lend the amount you’re willing to forego, especially if we’re dealing with family or friends. Of course, we’re not saying we should let go of the borrowed money. No matter how insignificant it is, money owed is money owed. If they refuse to pay back, here are some workarounds to help you manage the situation.

7 Tips You Can Do When Someone Doesn’t Pay You Back

1. Gentle taps won’t hurt

Giving them gentle reminders isn’t offending if they’re past their due dates. It’s always a good practice to set a payment schedule for when they can settle their debt. If it goes past this, gentle reminders will help them remember that they have liabilities left unpaid.

You could give them the benefit of the doubt too. People are often busy and this could make some forget their debts. Your gentle tap may be the nudge it takes to make them pay you. You could do this by inserting the topic in your conversation or by shooting them a message.

2. Try to renegotiate the payment terms

As mentioned earlier, borrowers will often set a date of maturity to assure you that they have the best intentions to pay. However, you’re surely reading this blog now because they haven’t followed through with their promise. 

If they can’t settle the debt on the designated date, you can’t exactly squeeze money out of them. One solution to do this is suggesting a staggered payment schedule that’s not too heavy of a burden. Some people feel ashamed when they can’t pay their borrowed amount in full and on time. Maybe they just need some time. 

3. Offer if they can pay another way

If liquid cash isn’t their strongest suit, perhaps they have something in their possession they can offer as payment. It doesn’t hurt to ask, especially since you have the high ground to negotiate. Most of the time, people agree. For example, they have an extra Macbook laying around the house that’s almost equal to what they originally owed you. If they don’t need it, it would be a good payment option because it’s a win-win.

Alternatively, you can ask them to pay back through services. Do you need someone to babysit your dogs while you’re on a vacay? Are they well-versed in writing and you need a document written? As long as they’re comfortable with the payment you require, they’ll most likely agree if it means getting away with debt. Naturally, some people will be reluctant to part ways with their belongings. This brings us to the next point.

4. Ask for a collateral

If they can’t forego a belonging, you can always ask for it as collateral instead. The key here is asking for collateral that they’ll be itching to have back in their possession. This way, they have more motivation to settle their debts and take them back.

There’s just one problem: collaterals indicate distrust. If you’re talking about a family member or a friend and you want to preserve your relationship, asking for collateral builds bad rap. If they’re genuine to pay you back, this might not be the best option. 

5. Give them financial planning tips

Sometimes, the reason they cannot pay their dues is that they’re bad stewards of financial resources. This means they won’t be able to pay you anytime soon, as the problem is systemic or etched in their system. You want to fix this behavior to prevent future mishaps of the same nature. Offering to give financial tips or financial management skills can help alleviate this. For example, teaching them about budgeting or saving is very helpful.

6. Be Straightforward with the consequences

Before I lend money, I simply remind them that I will never (in a million years) lend them money again if they do not repay what they owe me. As simple as that. My rationale: If they stand firmly on their ground of not paying back then why shouldn’t I stand firm on mine?

Now if you want to settle things legally and if you have proof and it is a large amount, the next tip will be useful.

7. Proceed to the Small Claims Court in the Philippines

If it can’t be helped, the last resort possibly to settle debts is through small claims court. This option will coerce your borrowers to pay their dues, especially if they’re too adamant to skimp on their payments. It was 2008 when the Supreme Court created the small claims court to settle minor utangs. According to the law, small claims are civil claims which are exclusively for the payment or reimbursement of a sum of money not exceeding P400,000.00 or P300,000.00, depending on the venue of the claim (as amended by OCA Circular No. 45-2019, effective 01 April 2019).

The purpose of taking debts into the small claims process is to give lenders and borrowers a safe platform to settle disputes involving money. Here are some pointers you should know:

  • the smallest claims should not be more than P300,000 (as of 2018)
  • No person can be compelled to pay the debt by threatening them with filing of criminal actions. Suits arising from non-payment of debts are only civil in character which cannot be a ground for criminal action.
  • You do not need a lawyer for small claims court
  • there is no limit to the amount you can actually sue someone for. Legally, you can sue someone for any amount in court.

Learn more through this post. If you want to file a complaint, here is a complete guide to help you.

At the end of the day, debts are debts and they should be settled, no matter who the borrower is, and regardless of how big the amount was borrowed. I hope the above tips will help you in your debt-settling conquest.

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7 Tips You Can Do When Someone Doesn’t Pay You Back | Philippines

By Ameena Rey-Franc

Recognized as one of the Top Finance Blogs in the PH. Ameena Rey-Franc (founder of TTP) is a former Banker and BS Accountancy graduate turned Blogger, Keynote Speaker, and entrepreneur. Currently an RFP delegate, she is also the Author of a book about Financial Resilience and has held seminars for reputable companies like GrabFoodPH, Pru Life UK, VISA, JPMorgan Chase& Co., Paypal, Fundline, Moneymax, and many more. The Thrifty Pinay's mission is to empower women to LEARN, EARN, and be FINANCIALLY-INDEPENDENT no matter what life stage they are in.