How To Collect On A Promissory Note
Many businesses use promissory notes to clarify the terms of a loan. When another business or individual agrees to the terms of a promissory note, it is entering into a contract with your company. To uphold the terms of a promissory note, you may need to seek a judgment by filing a lawsuit.
The Terms of the Promissory Note
To be enforceable, a promissory note must be a valid contract. In addition to the threshold requirements necessary for any contract, most often a note will contain terms that indicate the:
- Amount of the loan
- Interest rate
- Maturity date or whether it is payable on demand
- Place and date of issuance
- Signature of the issuer or lender
Obtain a Judgment
In most circumstances, your lawyer will suggest that you attempt informal requests and then a more formal demand letter to collect on the note. Assuming these prove unfruitful, a lawsuit for breach of a promissory note can be filed in the proper jurisdiction. Seldom are complaints on notes litigated, but in some cases the filing of the lawsuit may provide the impetus for a settlement. In most situations, however, a default judgment is obtained.
Enforce the Judgment
Once a judgment is in hand, you can enforce it by a number of means. These include wage garnishment, bank levy, seizure of assets or a lien against real estate. Among the damages that may be collectible include the unpaid balance on the loan, interest, court costs and attorney’s fees, plus whatever other damages that may have been specified in the note. It may be necessary to locate the assets of the borrower in order to determine which method or methods will be most effective.
Contact a Parsippany Business Litigation Attorney for Legal Advice
Understand your rights and remedies when faced with the dilemma of how to collect on a promissory note. Call a Parsippany business litigation attorney at Snellings Law LLC.
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