Make borrower comfortable
It is an important conversation to both loan provider and borrower. Bad emotions are not a good start
As borrower what happened
Try to understand why is the borrower overdue. Many borrowers focus on the repayment of interest, but the initial price of the item makes the most important part of repayment.
Differentiate between willingness and ability
Forget about courts and lawyers. This is one of the conversations, where a simple agreement makes the difference.