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  1. #1
    Join Date
    Apr 2011
    Posts
    3

    Default How to Get Repayment of a Promissory Note

    My question involves small claims court in the state of: Colorado

    Hello,

    I loaned a friend $4,000 cash February 3rd 2011 (I have proof I had $4,800 in cash from a tax stub and a picture with dates on both.). The loan was to be satisfied in one Lump Sum payment on April 7th 2011 as stated in the note.

    Today is April 13th 2011, I have received no payment and my calls/text messages have been ignored.

    Unfortunately, this note is unsecured, but I do know this person has a bank account and where he is currently working 4-5 days a week.

    The note is signed and dated by myself, a witness, and of course the borrower. Also stated in the note, "If the Lender prevails in a lawsuit to collect on this note, Borrower will pay Lender's court costs, collection agency costs, and attorney's fees in an amount the court finds to be reasonable.".

    I would like to take full advantage of this option and possibly the $1,000 late fee that is also stated in the note.

    I would also like to add, I recently discovered the Borrower has moved and in our agreement it states "The Borrower must promptly inform the Lender of any change in name or address." . This is an additional breach in our agreement.

    Even though this is only $4,000, I would like to use an attorney's service because the borrower states he will pay for the fees within the agreement and I feel using an attorney will reflect professionalism in court.

    I am at the very beginning of this inconvenience and I have not taken any legal action at this point. However, I have informed the Borrower through a text message (because he will not answer my calls.) I will be looking into legal advice if he refuses to pay, and I e-mailed him to document this.

    I would appreciate any helpful advice, opinions, or other steps I should take in this matter.


    Thank you,

    T.

  2. #2
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Promissory Note

    You are 100% certain that the defendant has the resources to pay the judgment? Because if you pay a lawyer to litigate this for you and rack up several thousand dollars in attorney fees, you'll have to both hope that the court will order you reimbursed for all of those fees and that the defendant can pay - otherwise you end up going several thousand additional dollars out-of-pocket, as your lawyer will expect to be paid by you. (The lawyer will probably want a retainer.)

    I am skeptical that a $1,000 "late fee" on a $4,000 loan is going to be deemed acceptable. Late fees are a form of liquidated damages, and a court would normally require them to be reasonable and proportionate to the actual harm you expected to suffer in the event of a breach. A 25% late fee seems designed to be punitive.

    This was an interest-free loan?

  3. #3
    Join Date
    Mar 2011
    Location
    California
    Posts
    540

    Default Re: Promissory Note

    Quote Quoting Mr. Knowitall
    I am skeptical that a $1,000 "late fee" on a $4,000 loan is going to be deemed acceptable.
    I agree. To clarify: some clauses in promissory notes and other contracts are deemed so much against the public interest that they cannot be enforced, even if both parties agree to them. This looks like one of them.

    Small claims court sounds much more practical than an expensive attorney. The key to winning there is preparation.

  4. #4
    Join Date
    Apr 2011
    Posts
    3

    Default Re: Promissory Note

    For some reason I had password issues with my account and was unable to reply.

    Yes, this was an interest-free loan because I have known the person since 7th grade.

    As far as what you have stated, at this point in time, the individual does not have the funding to pay me or any additional fees. However, that is not my main concern. I have money and am more inclined to pursue this due to the fact I was lied to, deceived, and disrespected after my genorous act of kindness. In other words, I have time to wait for this to be repaid, but do want it repaid of course.

    My major concern is a bankruptcy filing. I would be satisfied if I could place a lien on him that could not be lost through bankruptcy, then kill time until he really needs to purchase property, buy or sell a car, etc. One thing I do know about the individual is he has no support other than himself, forcing him to always have a job.

    What would be the best move in terms of locating some sort of asset to protect this promissory note from bankruptcy? Like I have stated, money is not the point here, it is the principal of the matter. I have time to wait, If I could find some way to place a lien on him my out of pocket costs will become his as stated in the note. What are potential assets one can legally use for a lien filing other than a house, car, boat, or land?

    Also, if this person happens to file bankruptcy and I have not gone to court and received a judgement, would it be correct to say my note will remain valid if I enforce the note after he has made a bankruptcy filing?

    Thank you for your reply.

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