I loaned a "friend" (of 14 years) $3000 appx 3 years ago. She was going through a difficult time. She was self employed as a staffer for the car business and after the economy bottomed out she was on the verge of losing her home to foreclosure. She also was about to have her phone shut off and was worried she wouldn't be able to get back on her feet if she couldn't conduct her business. Her boyfriend also self employed. He bought things from estate sales and resold them on EBay. Their mortgage was behind by $2500, her phone bill was almost $300 and the EBay acct was suspended owing $198.00. At the time my family was doing okay as I had just received some money from an insurance settlement and I had it to loan. I had western unioned her $2500 in cash, put her phone bill on my credit card and sent them money through PayPal to pay off the EBay acct.

It was always understood it was a loan but because they were going through such a rough time, I didn't want to pressure her with a repayment date and just said, "pay me back as soon as you can or if I ever need it back". She has made mention over the last 3 years that she hadn't forgotten that she will pay me back soon and had once made a payment of $250 dropping her debt to me down to $2750.

6 months ago our financial situation had changed. My husbands hours had started to be cut back. At first we juggled and managed but soon after it got worse and we also got hit with a few unexpected bills. I had approached my "friend" and asked if she could pay me back the money she owed me. If she couldn't handle the whole amount, I would accept payment installments but we really needed that money back. She said she would see what she could do and then shortly after picked a fight with me over something trivial. I saw that ploy for what it was and insisted that she pay me back all of it or else...

She had just filed for chapter 13 BK and stated that she couldn't be behind on any debt or have a new debt added or it would unwind the BK. I didn't want to cause any trouble for her but I needed my money back and told her as much. She had promised she would have the money to me by the end of May. The deadline came and went and not a word from her. My husband had finally gotten his hours back but not soon enough and because we had no other money coming in, all we could do was hope she would be honorable and pay, so we held off our creditors as long as we could. As a result our truck, that we had paid diligently for over 3.5 yrs had gotten repossessed. We are going to be able to get it back but we're going to have to let go of a few other bills to do so and its going to causes us much trouble. The money she owes me would put us right back on track.

I'm starting to see that unless I get "official" with her I'm not going to see my money back any time soon. Recently, on one of the rare occasions when we had a cordial conversation, she had let it slip that she's had steady employment for the last year and through some sort of loophole, she's been able to stay in her condo for the last 36 months and her car (a benz) for the last 18 months without having to pay anything and that her boyfriend just bought a new car. Now I'm furious! While my truck sits in a lot as we try to come up with $1100 by Friday to get our truck back and try to figure out how we're going to feed the family and keep the lights on, they're doing just fine! In what universe does that seem fair? So now I'm ready to role up my sleeves and get serious. You just don't do that to people, especially after a decade and a half of "friendship". Its all so pathetic and cliche!

Problem is, I live in Colorado and she in California. I looked into it and I can't sue her in small claims from here. I'd either have to hire a lawyer to handle the suit or file myself but I'd have to do it from there. Obviously can't afford that right now. I've looked into hiring a collection agency but the few that I found that will take on a personal, non-business loan want between 30-50% upfront in fees (and some after). I've kept all the proof (WU receipt, credit card bill, paypal transaction showing all the money I sent her, along with the emails where she acknowledges her debt to me and that she would be paying me back what she owed me, in full, by May, 2010).

I want to know if I can hire a lawyer (preferably in SoCal) to scare her into paying me back by sending her a letter on my behalf stating my intent to pursue all my legal options to get the money owed back within 30 days, without having to pay a retainer and if so how much would something like that cost?

And if anyone can think of anything else that I can do to get the money owed to me back, that would be greatly appreciated. Maybe a SoCal atty that would be willing to handle this probono?

Thank
Additional Details
Thank you all in advance for any and all advice. Sorry it was so long but I wanted to add the full history in case someone could think of anything else I could do. Maybe someone knows of a SoCal atty or firm that would be willing to take this on probono?