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How to collect money that is owed to you

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You want your money, but you have to go through the proper channels to collect it
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Collecting money that is owed to you can be challenging but it can be done

Heading out with a loaded shotgun, determined that this is the answer to how to collect money that is owed to you, is a very bad idea. Do not resort to this, as mad as you might be and as much as you may need your money. There are appropriate ways to collect money that is owed to you. Do not resort to vigilantism. There are sane and legal ways to recoup your cash.

Nobody likes being left high and dry, whether it is the result of a business transaction or the result of loaning money to family members or friends who swore on a stack of bibles that they would repay you. You may be a landlord who discovers that your renters have fled in the middle of the night, and left you holding the bag for outstanding utility bills.


Being owed money is infuriating, but do not let your anger get the better of you. Be prudent and go about collecting your money the right and legal way or else you may be the one who is hit with a heavy fine for breaking a law.

Consider taking your problem to small claims court. Contact small claims court in your town or vicinity and request the necessary paperwork needed to file a claim. Usually, this approach is a straightforward procedure and uncomplicated. You do not need an attorney to file the paperwork; you can do it. Nor do you need an attorney to represent you in court. However, you are responsible for making and presenting your case, including providing documentation and evidence.

The small claims process is geared to move expeditiously. Decisions are normally handed down the same day of your hearing. Usually, the cost of filing a claim in small claims court is nominal. Once you file the paperwork, the opposing party must be served with notification. The court will set a date for your hearing, and this route for how to collect money owed to you is quickly in motion.

Another approach to collecting money that is owed to you is mediation or dispute resolution. A judge may direct a mediator to deal with you case instead of having a court hearing. Mediation can move faster than going to court and it may be cheaper but it is not completely effective because the two parties must voluntarily come to an agreed upon settlement and that does not always occur.

A variation of mediation is arbitration. This is a cost effective and fast procedure; however, the arbitrator gets the final say and makes the decision. Both parties are bound to honor the decision of the arbitrator.

Some individuals opt to go to a collection agency in an effort to collect money. A collection agency is a business that one can hire to pursue debt collection; however, this can be an expensive approach in how to collect money. In fact, some agencies charge up to 50 percent of the amount that is collected.

You can always contact the credit bureau in your state, which can instruct you on how to make the bad debt owed to you a part of the credit report of the person who owes you money. This does not get your money back but it can certainly cause problems for the person who has not made good on the money he owes you. In fact, it may encourage him to make restitution to you so he can clear up his bad credit report.

If you are determined to go to small claims court, and the amount of money you are seeking is substantial, you may want to hire an attorney. Furthermore, if the person you are dealing with is an extremely difficult character, having an attorney on board can be helpful.

You may not be able to recoup all of your losses but getting some money back is better than getting nothing at all.

Resources: small business debt collection consumer credit

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