How to Recover Loaned Money in Massachusetts

Have you loaned a significant amount of money to a business owner or company and not yet received repayment? If you find yourself in this tricky situation, you may be wondering how to proceed to recover your money. Massachusetts law protects lenders as much as it protects debtors. However, it’s vital to understand the extent of protection and how to safeguard your interests.

We have developed this guide on what to do when a business owner delays or refuses to repay their debts. At Calabrese Law Associates, we help our clients in Boston and throughout Massachusetts recover the money they are owed, and we can help you navigate this sensitive and complex situation.

Contact Our Lawyers to Recover Your Money

Do Debtors Have to Pay Back Loans?

Borrowers are legally mandated to perform their obligations under a loan agreement. The general understanding is that loans must be repaid within a specified period, usually with interest. However, whether a transaction amounts to a loan is a question that can vary from case to case.

For example, suppose you gift money to a relative who invests it in their business. In that case, you may not be entitled to repayment or to claim a share of the profit if the evidence establishes that you intended the money as a gift. Additionally, the nature of the relationship and circumstances surrounding the transaction can determine whether there is a valid loan agreement between the parties.

It is always essential to consult an experienced attorney when giving out money, especially in commercial settings. Even for after-the-fact situations, you can still hire an attorney to assess the validity of your claim and help you recover where possible.

It’s possible to recover debts by non-judicial or judicial means. Non-judicial means is where you get repayment without going to court. This is often the first approach and may require negotiation skills to execute properly. Judicial means is where you institute legal action to compel the debtor to repay. This is often the last resort.

The private investment law attorneys at Calabrese Law Associates know the nuances of commercial credit transactions. We have the experience to examine your claim and determine your legal rights. We also offer professional legal representation to help lenders recover payments due.

What Are the Debt Collection Laws?

In Massachusetts, various federal and state laws are relevant to debt collection. Massachusetts’ fair debt collection laws apply to creditors, attorneys, debt collectors, and all persons acting on behalf of the creditors. It provides prescriptive rules regarding communication and debt collection practices. In general, creditors and their agents must act fairly and reasonably when dealing with debtors. Creditors cannot harass, embarrass, or threaten debtors. They cannot employ deceptive tactics and must respect the debtor’s rights at all times.

As mentioned, case law also plays a crucial role in debt recovery. For example, the court has reaffirmed the statutory position that contacting a debtor more than twice for each debt in a seven-day period in their home is unlawful. Similarly, a creditor who calls a debtor more than twice for each debt in a 30-day period at any place other than their home, such as their workplace, has breached the law. These are a few examples of laws you must comply with, making hiring an attorney for guidance essential.

Tips for Getting Your Money Back Without Legal Action

It can be challenging to stay objective, especially when you give a friend, family member, or business partner a loan to support their business. If you need your money back, this can strain your relationship and your own finances. You may want to tread carefully, but you should also be firm in your position so you can successfully recover your money. The following tips should help you:

• Request updates: Before you ask when you will be repaid the loan, request an update on the situation for which they needed the money. For example, if they borrowed money for a car repair, ask if it has been fixed. This can ease you into the conversation and express your concern. 
• Offer gentle reminders: Sometimes, a gentle reminder is all it takes to get repaid. Whether the debtor has genuinely forgotten about the loan or is deliberately evading payment, drawing their attention to the fact can go a long way. When you bring up the subject, try to be firm and straightforward without crossing into aggression and ask when they believe they will be able to repay the money.
• Give deadlines: Discuss and agree upon a deadline by which the entire loan will be repaid. If the deadline is getting close, you may want to meet so that you can remind them about the date and repayment. If they try to avoid you, be firm about the date of your meeting. When you meet, remind them about the deadline and the reason you need the money back.
• Express urgency: You may get the debtor to repay the loan if you express urgency. Besides demanding repayment, add a reason as to why you need this money, like funding a medical emergency. This can give the borrower a sense of urgency.
• Suggest payment installments: If this person is struggling financially, they may not be able to pay you back in one lump-sum payment. In this situation, you may want to suggest payment installments instead. When you negotiate payment installments, you are both achieving progress — you receive some of your money regularly, and the other party is gradually relieved of their debt. 
• Barter: If you are willing to barter, you may want to try bartering with a valuable item of theirs instead of the monetary payment. This can be particularly useful if you believe this person will never possess the money they owe you. Alternatively, you may choose to exchange their labor for the debt, such as allowing them to do work on your property or for your business.
• Ask for collateral: You may want to ask for collateral to ensure you are paid back. Generally, this should be an item the person does not want to go without, and you will hold this item until you recover your money. Doing this can incentivize them to pay you back quickly.

Sometimes, alternatives outside legal action are not effective in helping you recover the money you are owed. In this case, you may want to take legal action to get your money back by contacting Calabrese Law Associates.

When Can You Take Legal Action?

Sometimes, instituting legal action is the most pragmatic approach to recovering debt. This is especially true when all non-judicial attempts fail. Some people avoid litigation with the hope of maintaining a good relationship with the debtor. However, there’s no guarantee that will work, especially if you continue demanding repayment and the debtor keeps evading. In any case, it’s possible to sue to recover a loan while mitigating potential hostility.

Calabrese Law Associates has experienced attorneys capable of handling such complicated situations. We are friendly yet efficient in all our dealings. Our team of licensed and trained professionals will assess your case and suggest the best solution.

Before you pursue legal action, assess the situation by asking yourself some questions. Here are a few examples:

1. Have you tried all other avenues and been unsuccessful? 
2. Do you believe legal action is warranted for the amount owed?
3. How close are you to the debtor in terms of relationship?
4. Will the debtor be able to pay after you get a judgment?
5. Does the debtor have other assets you can enforce judgment against?

If you have been waiting a long time to be repaid, the odds may be low that they will pay you back, which means you may want to take legal action to recover this money. Also, remember that the law generally provides a timeframe within which you can sue to claim debt, so it’s important to act quickly.

What Is the Limitation Period for Recovering Debt in Massachusetts?

The statute of limitation creates a time limit on a person’s right to file a lawsuit or enforce a judgment. Actions of the recovery for consumer-related debts in Massachusetts must be commenced within six years from the date the right to recover accrues. However, if the lender already has a judgment against the debtor, the duration is extended to 20 years from the date the judgment was obtained.

How Do You Sue to Get Back Money That Was Loaned?

Before instituting legal action, sending a demand letter first is best. Demand letters notify the debtor about the default and direct them to make payments to avoid lawsuits. If they fail to comply, you can then proceed to file a civil suit.

After filing the suit, you must serve the documents on the debtor to enable them to respond. The debtor, now a defendant, may raise a defense depending on the facts. The debtor may also agree to settle the case out of court, which you can leverage for a swift resolution of the dispute.

Where the debtor fails to appear in court, you may apply to the court to give judgment in their absence. If the debtor does appear or otherwise participates, you may still have the option to motion the court for “summary judgment.” To motion for summary judgment, you must be satisfied that no other facts are needed for the court to be able to make an informed decision. Otherwise, the case will go to trial.

How to Prove You Are Owed Money

If you are taking legal action, you will need to prove that the debtor has failed to perform their repayment obligations. Written evidence can be particularly helpful in proving your cases, such as if you have a signed contract, IOU, or loan agreement.

You can still have a legal verbal contract if you and the other party discussed and agreed on this borrowed money. You can provide other forms of evidence to back up your claim, such as:

1. Bank statement of your money transfer to their account or a reference to this money being intended for a loan.
2. Text messages, emails, and social media messages in which you discuss the loan.
3. Witnesses to the loan agreement who are willing to give a statement.
4. Bank statements that show repayments were made, then stopped.

Is Taking Legal Action Worthwhile?

Ultimately, does the debtor have assets or cash that would make taking legal action worthwhile for you? You will need to pay to issue your claim and cover your legal fees, and if this person does not have many assets, you may end up with very little for your efforts. However, if the other party is employed and owns assets like a house or car, they should be able to cover the debt owed to you.

Why You Should Hire an Attorney

In personal and business matters, you may want to enlist legal assistance from an experienced attorney at Calabrese Law Associates. Our attorneys can write a letter on your behalf and send it to the debtor. When your debtor receives this letter on legal stationery, they’ll know you are serious about recovering the money you are owed.

If sending a demand letter is not enough, your attorney may advise you to proceed with a loan monies claim dispute. Your attorney can offer you guidance and assistance through this process. Every loan, debt, and situation is unique, so you may want the expertise of a qualified attorney on your side to ensure you are successfully navigating your specific legal situation.

Contact the Attorneys at Calabrese Law Associates

If you are in the Greater Boston area and wondering what to do when someone doesn’t pay you back, you may want to get legal assistance from an experienced attorney. At Calabrese Law Associates, our attorneys will be accessible to you and return phone calls in a timely manner.

We possess the industry insight and knowledge to help you achieve the results you are seeking. We also provide private investment services to individuals in Massachusetts. Contact us now at Calabrese Law Associates to learn more about our services!

This publication and its contents are not to be construed as legal advice nor a recommendation to you as to how to proceed. Please consult with a local licensed attorney directly before taking any action that could have legal consequences. This publication and its content do not create an attorney-client relationship and are being provided for general informational purposes only.

While Calabrese Law Associates does offer legal help for landlord-tenant disputes, it is extremely rare that we take on these cases. Only about 1% of tenant-related cases and 10% of landlord-related cases will be considered by our law firm.

Attorney Advertising. Prior results do not guarantee a similar outcome.