Do not underestimate the importance of a written document for personal loans. If someone wants to borrow money from you, get a written agreement. I am a collection attorney and I frequently get calls from people who lend money to friends, relatives, boyfriends, girlfriends, etc. They do not have a written agreement and the other party refuses to pay them back. Many times, the sum of money is quite large.
Without a written agreement, the other party will frequently allege that you provided them with a gift, not a loan and it is your word against theirs. What should you do?
If you are loaning money, always draw up a written agreement. You should also consider hiring an attorney to make sure that you are protecting your interests. Even though you may be close to the person borrowing money today, things may change in the future and you need to protect your interests.
Things to Include in a Personal Loan Agreement:
- The amount of money you are providing to the borrower.
- The rate of interest that the borrower will pay.
- The terms of repayment. You should specify whether repayment be in a lump sum or over a number of months or years.
- What happens if the loan repayment is delayed or not paid back? We recommend provisions for late fees and attorney fees.
We hope that your borrower pays you on time. However, these simple guidelines for drafting a loan document will protect you if this is not the case and future litigation is needed. Also, it might be a good idea to hire a debt collection attorney to review your promissory note. Local attorneys understand the legal provisions for each State and can provide additional wording to protect you.
Kind and Dashoff, LLC is a law firm and a licensed and bonded collection agency. The attorneys at Kind and Dashoff, LLC are experts at promissory notes in Maryland and Washington, DC. They are available to help you collect your unpaid promissory notes. They work hard to collect the money that is owed to you. Do not underestimate the importance of a written document for personal loans.