Guides / Money lent
Money lent to a friend, family member or business
Asking someone close to you to repay a loan is hard. Often the relationship matters as much as the money. This guide explains how to show the money was a loan, how to ask for it back in a way that leaves the door open, and what you can do if that does not work.
Was it a loan or a gift?
Many personal debt disputes come down to one question. Did both of you understand at the time that the money had to be repaid? If the other person now says it was a gift, or that they would repay “when they could”, the answer depends on the evidence.
Useful evidence includes:
- a written loan agreement or signed IOU;
- messages or emails about the loan, such as “I’ll pay you back in March”;
- bank transfer descriptions that say “loan”;
- repayments already made;
- what the money was for, and anything said about it at the time.
Arrangements between friends and family are often informal, so every piece of evidence counts. If the agreement was only spoken, write down now what was said, when, and who was there.
What was agreed about repayment
Think about what was agreed. Was the money to be repaid by a fixed date, in instalments, when asked, or when something happened, such as the sale of a car? The answer affects when you can ask for the money and when the time limit starts.
Add interest to your demand only if it was agreed. If nothing was said about interest, leave it out. A court can deal with interest if you later have to sue. See Interest, costs and time limits.
The numbers to know
$100,000
You can file a claim in the Magistrates’ Court of Victoria, which hears civil claims up to $100,000.
If they still do not pay
$10,000
A claim under $10,000 is usually sent to arbitration, a less formal hearing.
If they still do not pay
6 years
A claim on an ordinary loan generally has to be started within six years of when the right to sue arose.
If they still do not pay
Start with a conversation
Before a formal letter, try a calm conversation or message. Set out what you lent and when, what has been repaid, and ask how they plan to repay the rest. If they reply confirming the debt, keep that reply. A written acknowledgment of the debt signed by them restarts the six-year limitation period, and so does a part payment.
The letter of demand
If talking has not worked, a letter of demand puts the request in formal terms. It should list each amount lent and the date, any repayments, the balance owing, the evidence that it was a loan, a deadline, and what you will do if it is not paid.
A letter from a lawyer can be firm without being hostile. We write in a measured tone that makes the claim clear and still allows an arrangement to be reached.
Money lent to a business. If you lent money to a company, the company is usually the borrower, not the person who runs it, unless that person signed a personal guarantee. If the company owes at least $4,000 and there is no genuine dispute about the debt, a statutory demand may be an option. See Statutory demands.
If they still do not pay
You can file a claim in the Magistrates’ Court of Victoria, which hears civil claims up to $100,000. A claim under $10,000 is usually sent to arbitration, a less formal hearing.
Before you start, think about whether the borrower can pay. A court judgment against someone with no income or assets may be hard to collect.
Mind the time limit. A claim on an ordinary loan generally has to be started within six years of when the right to sue arose. A loan made by deed generally has a 15-year period. See Interest, costs and time limits.
Common questions
Have another question? Phone 1800 776 529 or send us a message.
Yes. A spoken agreement can be enforced, but you will need to prove it. Bank records, messages and repayments all help.
Yes. Each repayment is evidence that the money was a loan, and a part payment restarts the six-year period.
Consider an instalment plan. Put it in writing, have them sign it, and say what happens if a payment is missed.
Law referred to
- Limitation of Actions Act 1958 (Vic) ss 5(1)(a), 5(3), 24(3), 25.
- Magistrates’ Court Act 1989 (Vic) ss 3(1) (definition of “jurisdictional limit”), 100(1), 102.
- Corporations Act 2001 (Cth) ss 9, 459E, 459H.
- Corporations Regulations 2001 (Cth) reg 5.4.01AAA.
Last reviewed: October 2026, by a Victorian solicitor with a current practising certificate. This page is general information about the law in Victoria as at October 2026. It is not legal advice about your circumstances.
Lent money and not been repaid?
We can send a measured, formal letter of demand on our letterhead for $440 including GST.
Phone: 1800 776 529
Email: info@lettersofdemand.com.au
Hours: Monday to Friday, 9 am to 5:30 pm
Office: 435 Nepean Highway, Frankston VIC 3199. We act across Victoria by phone, email and online.
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