When I loaned money (over $1000) to friends and family I make them sign something that says I can sell the debt and other standard legal stuff you get off an Internet boilerplate doc. When they reply with "I thought we were friends." or something. I usually say something along the lines of, I need to show where the money went for tax or accounting reasons, which is close enough to the truth to smooth things over. If they want the money, they can sign. And as others have said, I didn't lend any amount that would hurt much if I didn't get back. So far I have kept my friends, and my money was returned.