Financial Advice

Help! My Sister Won’t Pay Back the Money I Loaned Her

Q. My sister has borrowed money from me and she stopped paying me back. We didn’t do a formal loan, but I do have paperwork saying she’d pay me $200 a month until the loan was paid off. She hasn’t made a payment in six months. She keeps saying she’s trying, but I need the money. What can I do?

A. Family and money can be ugly business.

We’ll assume that you’ve already tried talking to her, given that she said she’s trying, but trying won’t help your budget at all.

You didn’t say how much the loan was for, but in New Jersey, you can file a suit in the Small Claims Division of the Special Civil Part Court if the balance is less than $3,000, said Ronald LeVine, an attorney based in Hackensack, N.J.

“The office is in the county courthouse of the county where the debtor lives,” he said. “It won’t help family relations, however, but it might motivate her to begin paying.”

LeVine said the suit will result in a trial date being scheduled, at which time your sister will have to come to court with the written promise to pay and schedule of payments.

“The Division is set up to help non-lawyers to handle cases, and the staff in the court offices is quite helpful,” LeVine said.

[Editor’s note: A judgment in small claims court can result in a negative mark on the debtor’s credit report in a number of ways, including a real estate lien. If you’re worried a small claims debt could be affecting you, you can check your credit reports for signs of a lien (you can get your free annual credit reports at and you can monitor your credit scores for free on to see when it has been removed.]

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This article by Karin Price Mueller was distributed by the Personal Finance Syndication Network.