If somebody doesnot want to pay your money back, what would be the best legal route to go through? Its a personal transaction and doesnot have any documents in written.

Small claims court. He/She might cave in and give you the money.

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Text the person and ask your money. If he says 'no, i wont give your money' in the text, that will serve as a legal document to prosecute him. Email will also do.  
If the person admits that he has taken money and will pay later, you can't do anything legally. You have to show the evidence that the person has no intention to pay back. 
Go to district attorney's office and file a case against him. You have to mention his address too.

I think the person is he. If she, read accordingly. People sometimes don't appreciate the help you do. They become so big in a few months that they forget they might need people in future. If it was Nepal, that bastard would not have that much courage to deny paying back. But, unfortunately, here things are different. Anyway, hope you get your money back.

 The person said he will pay when he has it and it has been more than 2 years. So, there is a clear indication that he doesnot want to pay. What if I dont know his full address but do know the school he goes to?

 Syd_acid,
How much is it anyway? Does that person work? Can't he pay in installments like 200-300 a month? Try asking money in front of his friends to embarrass him. If you know his family back home, ask with them. If nothing works, tell him, you will send message to each of his friends in facebook that he had eaten your money and will ask them to give his family's phone number in Nepal. These kinds of crooks need to be dealt with no mercy. 
Coming back to legally prosecute, irritate him so much through text message (include the amount he owes in the text) that at one point he will say, no I won't pay your money back. Remember, do not threaten him. There is no problem using language like mo..fo, bi$ch, jackass, asshole. 
If you have his date of birth or SS no, they can pull his address. Address is required because the DA's office need to send registered mail with a court date for him to attend. If he lives in the same city, it is not that hard to get his address. 
If I were you, I would not let him digest my hard earned money easily. I would rather prefer to give that money to charity.

Forget about your money ... Sathi Ko maan pagalyeu bhane sayad paisa frita paulau...

 kati paisa linu baki ho..sathi