John and Juan are friends. Juan borrowed money from John in order to finance his business. John agreed and lent him P50,000.00. As for the terms of payment, it was agreed that Juan will pay in five equal installments every month starting July 6, 2011.
Juan was able to pay on July 6, 2011. However, come August, Juan failed to pay. On September, Juan still was unable to pay John. He even failed to explain to John his reasons why he was not able to pay the installments for the months of August and September as agreed upon.
On October, John got sick and he needed money. So, he decided to act on the collection of Juan’s debt. In as much as he wanted to start right away, he was unsure of what steps to take in order to collect from Juan.
What could be the best action on John’s part? The first thing to do in collecting from the borrower is to send a Demand Letter. This should be done by John. Such letter should state:
- the amount of money that John is demanding from Juan
- the terms of payment
- the date when such payment should be made
- the place where such payment should be made
- and a provision that should Juan be unable to comply with such demand, John would be constrained to file the necessary legal actions against him.
Lastly, John should make sure that the Demand letter was received by Juan. This is to make sure that Juan was sufficiently informed of the demand and that he was really given the opportunity to do what is asked of him.
For more information on debt collection, contact us at firstname.lastname@example.org or visit our website www.domingo-law.com.
See also: Estafa vs. Bouncing Checks Law