Many times we need that extra cash to make a purchase. The banks often times offer unacceptable terms on loans (even small ones). There is no better option than loaning or borrowing some money from a friend, relative or some one who is willing to help. However, if certain legal protections are not extended and things go wrong, you may lose a friend, a relative, or reputation. It is necessary to take some steps to have everybody’s interest protected.
Create a written document that reflects the borrowing or loaning terms.
First things first. A piece of paper with the terms is a must to have. Such legal document is called a promissory note. Transactions over $500 should be in writing. It does not matter if a person you are borrowing from (or you are lending to) is your friend, relative, or just some one you know. Without a written and signed agreement, it will be much tougher to prove the transactions with oral agreement.
Make sure to include at least the following information in the promissory note:
- The amount borrowed.
- The date of signing the note.
- The end date of the borrowing period.
- The signatures.
- The interest rate.
These are the most important terms to include. However, it is always smart to include a provision that provides for attorney’s fees to the winning party if things go sore.
What if the borrower or the loaner did not pay the interest or the note.
In the event the money is not returned, the best course of action is of course to try to negotiate with the borrower how the debt can be returned. However, worse comes to worse, the last resort is a court proceedings. The lender should file a complaint called “Enforcement of Promissory Note” in the local court. The lender should ask the court to cancel the promissory note and issue the judgment instead. The judgment should include the amount owned, the unpaid interest, and the attorney’s fees for the enforcement action.
Make sure that for the final hearing you bring the original of the note, and a document that shows how the interest was calculated (often times called fee schedule).
What should I do with the judgment?
There are some procedural steps the judgment holder should take before starting collecting. As this process is quite complicated, it is advisable to retain an attorney to do so.
How does attorney gets paid in the enforcement action?
The answer to this question is it depends. Some lawyers will ask the contingency pay, which is a part of the amount owed on the note. Others will be charging hourly. The way the attorney will charge you depends on many circumstances. For example, the amount owed or the circumstances surrounding the default (non-payment).
If you face an issue with the promissory note, our law firm will assist you with all and any step of this process including drafting, negotiating, enforcement or litigating on the note.
Contact our office:
Address: 2410 Hollywood Boulevard
Hollywood, Florida 33020