How to sue a friend or a family member for a loan

How to prove a personal loan, when the 2-year clock starts, and how to claim in Small Claims Court.

By the Make Them Pay team · reviewed 2026-08-23 · 2 min read

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Legal information, not legal advice. Results depend on the facts of your case.

Legal information, not legal advice. This guide and our free tools give legal information. They do not give advice about your case. A licensed lawyer can give legal advice.

The answer

A personal loan is a real debt, even between friends. You can sue for it in Small Claims Court, up to $50,000. Most of these cases turn on one question: was the money a loan or a gift?

What to do

  1. Collect the records: e-transfers, bank statements, texts, and emails about repayment.
  2. Write a timeline: each advance, each repayment, and the balance.
  3. Make a written demand for repayment, with one date. For a loan with no due date, the clock starts when you demand payment and do not get it.
  4. Check the deadline: /calculators/deadlines.
  5. Send a formal demand letter: /demand-letter.
  6. Fill in Form 7A, file it, and pay $108: /build/7a.
  7. Think about collection. A job means wages, and you can garnish up to 20% of net wages.

Loan or gift: the proof

Texts help most: any message where the person promises to pay the money back. A witness to the agreement helps. Part payments help: they show the person treated the money as a loan. A signed written acknowledgment of the debt resets the clock, if made before the deadline. A part payment has the same effect as a written acknowledgment.

Deadlines and fees

  • Loan with a due date: the clock starts at the missed date, in most cases.
  • Loan payable on demand: the clock starts when the demand is made and not paid.
  • File a claim: $108. Default judgment request: $94.

Common mistakes

  • Do not call the money a gift in one message and a loan in the next. The texts are evidence.
  • Do not demand payment and then wait for years. The clock runs after the demand.
  • Do not skip the demand letter. It costs $0, and it can end the dispute.
  • Before you sue a person with no income and no assets, read: is it worth it.

When to get a lawyer

Get legal advice if the person says the money was a gift, or the amount is large. Legal services provided by Mithril Law — Jonathan Kleiman, licensed Ontario lawyer.

Free tools

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Your next move

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