Need to know how to collect on a personal loan made to a family member

You made a mistake by loaning money to a relative, and you face the same choice -- do you want a relationship with your granddaughter (or one in the future) or do you want to try to collect and maybe even file a small claims case?

You can go to small claims and prove its owed to you. Or you can let it go.

You should probably take the high road and express the virtue of forgiveness. Family is still family, don't let money get in the way. The better lesson to impart on the grand daughter is that you won't be inclined to help in the future because of the way she treated you with this situation. (really, she offered 1 cent per month, that is just insulting; so I understand your frustration). Now, you don't need to "tell" her any of this; just tell her to pay what she can...and if she ever asks you for money in the future, say no. On the legal points, you face the same choice any person or entity to whom is owed money and the debtor isn't paying as agreed. You can call and request payment, you can send letters requesting payment, and you can eventually sue. It is unclear if your granddaughter lives in the same state, if she does, then you would sue in small claims court. If she lives outside of your state, then the cost to sue would likely be prohibitive (as you would need to hire an attorney and travel).

The procedure for collection would be to file a small claims lawsuit. You can find general instructions with a quick internet search.