If you look at an example of an installment loan, you might write, “The first payment, including interest, of $1,100 (one thousand hundred dollars and not cents) is due on February 1, 2013 and the first day of each month thereafter, until the amount is fully repaid.” Format the letter as a business letter and send it officially. Enter your address at the top of the page. Write the name and address of the debtor to your address. Start the letter with a formal “Dear Sir/Madam”, followed by the person`s last name. If the person who owes the debt does not sign the document for the money owed, write it down and sign it yourself. You will also need to provide evidence to prove the existence and legality of the debt, e.B a void check or an electronic transfer receipt. Attach the proof of guilt to the legal document. Send a copy of the signed document with attached proof by registered mail to the debtor. To draft a legal document for the money owed, first provide your name and address, as well as the same information for the borrower. Next, add the payment terms based on the type of loan you provided. For example, if you opt for an installment loan with interest, you specify that the borrower will make x payments over a period of time, with part of the payment going towards interest.
Then specify whether the loan should be unsecured or secured by a guarantee. Finally, ask the borrower to sign and date the promissory note. To learn more, including how to handle late or missed payments, read on. Chris Blank is a freelance writer and research consultant with over 20 years of experience. Blank specializes in socio-political analysis, news, popular culture, and travel. His work has been published both online and in print publications. He holds a Master of Arts in Sociology and a Juris Doctor. If you`re considering lending money to a friend or family member, there are other more formal options than this form, including a promissory note or loan agreement. Learn the difference between a promissory note form, a promissory note and a loan agreement. Anticipate that the borrower will miss at least one payment for you. Remember, if that person was good with money, they wouldn`t have had to borrow it from you.
Without this document, the lender or borrower may be frustrated if the other party does not keep their promise to give money or repay money. A basic promissory note clearly indicates how much money has been borrowed and when it is to be repaid and, if necessary, with interest. Rocket Lawyer`s payment letter of formal notice allows you to specify when payment should be made to avoid possible legal action. It is customary to allow about 15 to 30 days for the payment of the money due before taking legal action. If you are owed money, you can sue to collect the debt. However, without proof, you have little recourse. In addition, the law generally limits the maximum time you can wait to take legal action. Check the laws of your respective jurisdiction. If you are the (presumed) debtor but refuse the debt for any reason, you can ask the creditor to provide proof of the debt demonstrating that the debt is legitimate and that payment of the payments requested from the payer will settle the debt.
A promissory note allows both parties to record the amount of money borrowed and specify when the money is to be repaid. Even if you are family, friends or colleagues, it helps everyone remember exactly how much money was borrowed in case the memories fade. Define clear terms and communicate them. Tell the borrower verbally and in writing that you expect to be repaid in full. In particular, note how much you should pay. Discuss a payment plan in the contract: the amount of payments, how often they are made, and when you should receive them. Also clearly state the consequences of late payment, as well as the interest you want to charge. Check the facts that led to the debt.
Be polite but firm in your tone. For example, if you`re writing about a personal loan, you can start by saying, “As you know, you contacted me on [date] for help with your late car payment. I lent you the sum of [dollar amount] and you promised to repay the money in [the period]. In the next paragraph, note the penalties or fees you charge if the borrower makes the late payment. You might write, “If I, John H. Doe, take the loan by 31 years. In December 2013, I agreed to pay an additional penalty of 10% of the loan amount with the initial loan amount. Drop a few lines and enter signature lines for your name, the name of the borrower and the name of a witness. Leave room for the notary under the signature lines to witness the signing of the promissory note.
A promissory note is a written promise to repay a debt due. Like a promissory note, this document recognizes a legally binding relationship between two parties – a lender and a borrower. The first step in creating a contract for a loan is to decide what type of payment plan will be offered. One option is to provide an installment loan for which no interest will have to be paid. In this situation, the person borrowing the money must repay the amount borrowed in equal payments over the period specified in the contract. Promissory notes are legally binding on both the borrower and the lender. A promissory note is a written agreement that the borrower will repay a certain amount of money within a specified period of time. Although many promissory notes are prepared by lawyers, financial institutions and lenders prepare their own. You can write your own promissory note to document someone else`s guilt to you, and the court will confirm this as long as it contains the necessary legal elements. When you write your promissory note, you clearly disclose all the terms of each party`s responsibilities. Note the identifiers of the parties involved and the date.
Don`t just rely on signatures to identify the named parties in a contract. Make sure that the full legal name of each person involved is written on it. Also add identifiers for each person, especially if they have a common name. Identifiers can be the person`s home address and/or birthday. Date the start of the contract and indicate to each party a place to write the date next to their signature. At the beginning, make it clear what type of contract you are dealing with. When lending money, make sure that the phrase “contract” and/or “promissory note” appears at the beginning of the document so that there is no future argument that money is a gift. For a promissory note to be legally binding, the signatures of both the lender and the borrower are required. And in some states, a notary and a witness are required to sign the promissory note to be valid. Check with your state to make sure you know the laws.
Has a friend, relative or colleague borrowed money from you? Read our article on smart strategies to help you get your money back. A promissory note or “I owe you” is used by someone who borrows money (the “borrower”) to officially document that they owe a debt to someone (the “lender”). Gather the information needed to meet any legal requirements. The promissory note must identify the lender and borrower, the amount of the loan, the interest rate of the loan, the terms of repayment and the due date of the repayment. Look for your state`s usury laws to find out the maximum legal interest rate you can charge the person who owes you money. You cannot execute a promissory note in court if the interest rate on the promissory note exceeds the legal limit. Legal Templates provides a free IOU template for everyday situations where you want a written record of borrowed or borrowed money. List the amount of money owed. If applicable, specify the purpose for which the money is due. Specify the date the debt was created. Start your promissory note by indicating the date of signature of the bond, your legal name as a lender and the legal name of the borrower, your address and telephone number – as well as that of the borrower – and the amount of the loan.
For example, you could write, “The 10th. In January 2013, I, John H. Doe, residing at 111 Oak Lane, My Town, My State, telephone number 111-111-1111, promised to repay in full the amount borrowed of $10,000 (ten thousand dollars and no cent) plus interest to Jane A. Smith, residing at 555 Walnut Drive, Her Town, Her State, telephone number 555-555-5555. Sign the contract in the presence of a notary. Inform the loan and help the borrower know that you are serious about getting your money back; sign the contract only in the presence of a witness. Make a copy of the contract for the borrower and keep the original in a safe place. A promissory note is similar to a promissory note and a loan agreement, but is generally not a negotiable document and does not contain details about repayment and the consequences of non-repayment. Anyone who borrows or borrows money for professional or personal reasons should protect themselves from unnecessary headaches in writing. In addition, lenders and borrowers do not need to be individuals. Due to the debt crisis, governments like Greece could even issue temporary promissory notes or “scrips” on their outstanding debts.