Debt - you're owed money

If you had an agreement, and you have carried out your part of the deal (such as lend them money) you are entitled to force the other person to comply with the terms of the agreement.

• This could be an agreement to lend someone money on the basis they will pay it back (with or without interest).
• This could be an agreement with a customer that in exchange for providing a service to them they will pay you an agreed sum of money.

Ideally there will be a written record of what was agreed – such as confirming it is a loan (not a gift) and when they were to pay it back. It should also cover whether you were charging them any interest.

If there was no written agreement, there may still be other proof of what was intended. Perhaps emails or texts sent between you at the time of the loan.  A text saying “thank you for lending me the £3,000 darling. I promise you’ll get it all back soon” would be ideal.

There may be other evidence, perhaps a friend of you both was present when you discussed the arrangements and would be prepared to write a letter to you confirming what they remember about the loan.

Even if there is no evidence, you could still (in theory) use the small claims court. If the other person does not decide just to pay you back then it would go to a hearing and the judge would listen to you both.

You would need to try to persuade a judge that you transferred the money and it was ‘more likely than not’ that the transfer of money was a loan rather than a gift.

However there are steps to take before court action:

• Call the person and appeal to their sense of fairness – perhaps offering to have the money back in installments.
• Send a formal complaint letter (see sample letter)
• Try mediation
• If all else fails use the small claims court (claiming not only the money lent but also the court fees, a small sum towards legal advice and interest at the court rate of 8% from when you should have been repaid).

All of these are explained on our website and guides.

The area of law is known as Contract Law and your claim would be for a breach of contract.  

Any of the following could help you prove your case:

1. Any written agreement about the money.
2. Any other written evidence that show what you both intended or had agreed (such as emails or text messages sent at the time).
3. A letter (or statement) from a friend or acquaintance who was present when you and this person agreed the arrangements for the loan and can say what they heard you both discuss.
4. Had the money been lent and paid back before? If it had any proof of this would show you already had an established routine and the same terms would apply this time.
5. Can you show that you had never made large gifts of cash to this person before?
6. If you don’t have much money, it would help your case to provide details of your income, outgoings and any savings to show it was unlikely that the money would have been a gift.

The full amount you are owed

Any interest that it was agreed would also be paid

If you are forced to use the small claims court you can also claim back the court fees, a small contribution towards the cost of legal advice and interest (even if you had not agreed to charge interest) at the court rate of 8% every 12 months from the date the loan should have been repaid.

You will need to start your claim before the deadline (called the  limitation date) , which for breach of contract claims the time limit is six years from the date the other person broke the agreement.

A former partner, friend or family member owing you money.