How Promissory Notes Work for Debt Collection

The hand of a man signing a document.Want to win your New York debt collection case? Ask your non-paying customer to sign a promissory note.

If your customer says they’ll pay the debt, having them sign a promissory note confirming this commitment can help you prove they owe you money should legal action be pursued.

What Is a Promissory Note?

A promissory note incorporates a borrower, client or customer’s agreement to pay. It is a contract, and as with all contracts, the necessary requirements must be in order for it to be valid.

The written document should be signed by the debt-owing party, confirming their promise to pay. It should specifically state the amount of the debt as well as the terms of repayment — amount, interest, due date (if any), etc.

The note should include the details of the offer as well as an agreement to perform. The transaction must have been performed, and the party asked to repay in accordance with the terms contained in the note.

How Can a Signed Promissory Note Help You?

For the purposes of New York debt collection, if your client fails to honor the terms of the note, you can bring an action on the note itself. You do not need to sue on the underlying transaction (the loan or the goods sold) but rather on the note itself.

Litigation on a promissory note in New York offers you an option. You can start your lawsuit in the traditional manner by filing a summons and complaint or by bringing a motion for summary judgment. The second option allows you to get to the heart of the matter immediately.

Thinking About Asking Your Client to Sign a Promissory Note?

Asking your delinquent client or borrower to sign a note and/or confession of judgment is commonplace in a business relationship where the parties wish to resolve a past due balance amicably.

However, even with the best of intentions, repayment is not always guaranteed. To ensure success in your debt collection efforts, you’ll want to make sure your promissory note is properly prepared.

With over 75 years of experience, we can help you. Request a free consultation here.