Have you ever wondering what is a promissory contract? Have you ever borrow a close friend a sum of money and never get back? Have you just decided to borrow a sum of money to friend? Then, this is the right article for you. Just to secure yourself that you’ll get your money back in the future.
A promissory contract is a note written down that the borrower will pay a fixed sum of money to the lender, on the specified day, as well the percentage of the principal amount from the primary fixed sum of amount, plus any other declaration written down on the agreement. All declarations have to be agreed upon by all members party who’re involved, prior to the signature is being signed on the contract paper.
People who are not involved in the contract do not have the right to add, influence or somehow, get involved with changes of the contract agreed upon by the parties to the contract.
Generally, a promissory note is used by individuals rather than businesses. However, it can sometimes be seen in family run businesses, which do not have many traders and customers. Common cases of individuals’ promissory notes are borrowing/lending money amongst friends.
Failure to payback the sum of money by the date stated on the promissory note is considered as breach of promissory note/contract. The lender is able to take legal action against the borrower.
When a borrower has failed to payback the lender, it’s my best advice that the lender take the following steps before decided to take any legal action against the borrower:
1. Call the borrower, remind him/her regarding the loan
2. Give the borrower a second reminder. This time, remind him/her that if he/she still fail to pay you back soon (Give a specific time. Preferably a week from this reminder), you’ll be suing her/him for breach of the promissory note.
3. Give the last warning
4. Get in touch with your local debt advisers/solicitors.
5. Lastly, process your legal lawsuit papers with the help from your solicitor/debt agencies.
If you are a borrower whose name & signature is in the promissory note, you are obligated to pay back the lender. If you can’t pay back the lender on the specific time & date stated on the promissory note, do not ignore it. Let the lender know your situation. Perhaps, the lender would agree to extend the payable date.
Otherwise, there are several methods that a borrower might be able to get help from:
1. Consider a bank loan. Don’t forget to compare various interest rates among banks.
2. If you have a bad credit history, private loan companies are able to lend you some money. Although, they do have the right to charge an extremely high interest rate.
3. Get a solicitor to help you on debt settlement program. Once you have chosen a debt settlement program, you stop paying your lender directly. Instead, you’ll be paying your debt settlement company monthly, with the amount agreed upon by you and your chosen debt settlement company. This will mean that you stop getting reminders from your lender asking you to payback and stop dealing with him/her. Usually, the total debt will be reduced by your lender, through negotiation with your debt settlement company. However, it has to be agreed upon by your lender and the debt settlement Company.
In conclusion, a promissory note is enables a lender to take legal action to get back the money which he/she lends out. It’s simple, easy to use yet doesn’t cost a penny.