The #1 rule of thumb is: Make a written contract stating the terms of the loan/gift you are extending. You, the lender, and the borrower/s should both sign it. The contract should suffice as legally binding. However, we make allowances for friends, families of close relations. A borrower who can't do repayments on time you have set for him, because of illness or unemployment, you both need to communicate those problems when they arise. So, we need to be discreet and careful that with borrowing and lending, a mutual agreement must be kept as promised with mutual respect and trust. And as the lender, be prepared for hard times-- and those times should be settled with genuine understanding and working out Plan B. Firmly avoid in taking your case to dispute with your borrower in the Small Claims Court. That won't be necessary. If you are the borrower: be trustworthy, make your repayments prompt. Keep your good name intact and unmarred as a good payer. Lending and giving money as a gift are two different activities. The gift should not be expected to be returned with favors or with kind. It's a gift with no strings attached.