Step-by-step
Gather evidence of the loan
Collect bank transfer records, any written agreement or IOU, and messages acknowledging the loan.
Request repayment in writing
Send a clear written request for repayment, specifying the amount and a reasonable deadline.
Consider the relationship
Decide if court action is appropriate given the personal relationship. A payment plan may preserve the relationship.
Send letter before claim
If informal requests fail, send a formal letter before claim giving 14-28 days to pay or propose a payment plan.
File your claim
File via Money Claim Online. Include the loan amount plus any interest if agreed.
Recovering Private Loans
Lending money to friends or family is common, but when loans are not repaid, the informal nature can make recovery difficult. However, you have the same legal rights as any creditor.
Common scenarios:
- Informal loan to friend/family not repaid
- Signed loan agreement or IOU ignored
- Partial repayment disputes
- Interest calculation disagreements
Key points:
- Verbal loans are legally enforceable
- You do not need a written agreement (but it helps)
- The personal relationship does not affect legal rights
- Courts handle these claims regularly
Evidence You Need
Essential evidence:
- Bank transfer records showing money sent
- Written loan agreement or IOU (if exists)
- Text/email acknowledgments of the debt
- Repayment history (if any)
Helpful evidence:
- Messages discussing repayment
- Witness statements (someone who knew about the loan)
- Any agreed repayment schedule
- Evidence of what the money was for
Tips:
- Do not delete messages - screenshot them
- Bank statements show you had the money to lend
- Their acknowledgment of the debt is powerful evidence
Proving a Verbal Loan
If you have no written agreement, you can still prove the loan:
Bank transfer:
The transfer reference and amount can indicate a loan. A reference like "loan" or the amount being a round number supports your case.
Communications:
Messages before the loan ("Can I borrow £500?") and after ("I'll pay you back next month") prove the arrangement.
Context:
Explain why you made the loan, the circumstances, and any discussions about repayment.
Their defence:
They may claim it was a gift. You must show on balance it was more likely a loan than a gift. Regular repayments, discussions about repayment, or acknowledgments all help.
Claiming Interest
If interest was agreed:
You can claim the agreed interest rate. Ensure it was clearly agreed at the time of lending.
If no interest agreed:
You cannot claim interest during the loan period. However, once you start court proceedings, you can claim court interest at 8% per year from the date of filing.
Statutory interest:
The Late Payment of Commercial Debts Act does NOT apply to private loans - only business-to-business transactions.
Calculating court interest:
Amount × 0.08 × (days since filing ÷ 365)
Frequently asked questions
Can I claim if there is no written agreement?
Yes. Verbal agreements are legally binding and enforceable. You need evidence that the money was a loan (not a gift) and that it was agreed to be repaid. Bank transfers, messages, and witness evidence can prove this.
What if they say it was a gift?
The burden is on you to prove it was a loan. Evidence helps: discussions about repayment, any partial repayments made, the context (was it an emergency loan?), and messages referring to "paying back" or "borrowing".
Should I take a family member to court?
Consider the impact on family relationships. Try informal resolution first, then a formal letter. Court should be a last resort. However, if they are refusing to repay money they owe, you have every right to pursue it legally.
Can I claim if they paid back some of the money?
Yes, you can claim the outstanding balance. Partial repayments actually help your case as they acknowledge the debt existed. Document all payments received.
What if they cannot afford to pay?
You can still get a judgment, but enforcement may be difficult. Consider whether a court-approved payment plan is more realistic than a lump sum. Having a CCJ registered against them may motivate payment.
How long do I have to make a claim?
Six years from when the loan was due to be repaid (or from the date of the loan if no repayment date was set). Any written acknowledgment of the debt or partial payment restarts this period.
This guide provides general information about UK small claims court procedures and is for educational purposes only. It does not constitute legal advice. CourtPilot is not a law firm and is not regulated by the Solicitors Regulation Authority. The law may have changed since this guide was last updated. For advice specific to your situation, please consult a qualified solicitor or seek help from Citizens Advice.