Lending money is always something we do out of a good heart, but rarely do we think ahead of time whether the person might fail to pay back the loan. When someone fails to do so, you don't think to hire an attorney and take them to court right away. You usually try to settle outside of court and avoid the court costs involved.

So when do you know that it's time to actually initiate a lawsuit against someone who owes you money? There are a few things to look at before you do so.

First of all, how much money is owed? Is it a large sum or a small amount? Smaller amounts are usually not appropriate for suing over.

Secondly, who is the person that you loaned the money to? Is it a close friend or relative? Or is it someone you don't know as well? If it is someone you are close to, then you should not jump to suing as a first resort. This can damage the relationship you may have with the person. Even if the financial issue between you is causing a strain on things, that doesn't mean you can't figure it out together instead of taking it to the law.

What if the person doesn't talk to you? This could be, again, because there is a strain. It could also be because you have lost touch with the person or they don't know you very well so they aren't responding to your calls or other contacts. At this point, you may at least pick up the phone and contact an attorney.

However, remember that a lawyer is in business, and they want your business. They are not going to instruct you to settle this on your own if you can. So even though you may inquire with a law office, that doesn't mean you have to enlist their services in the first phone call. Almost all law firms will offer a free consultation, either by phone or in person. You can get some free information about what your rights are from a legal standpoint and what your options are.

Again, you should still try to settle this with the individual. Even once you have contacted an attorney, you should try writing a letter to the person letting them know that you are considering taking them to court, but you'd rather settle it just between the two of you if possible. This gives the person a last chance to do so. Once you write that letter, save it and give them a couple weeks or more to respond.

Once a certain period of time has lapsed, call the law firm again, and show them your copy of the letter. This demonstrates that you have officially attempted to get your money returned. The attorney can then help you begin with the lawsuit, as that last resort.