Easy Questions  
Free Legal Documents

Frequency Asked Questions About Promissory Notes in Abbott, TX

Frequency Asked Questions About Promissory Notes in Abbott, TX


Promises make debt, and debt makes promises.
 
- Dutch Proverb


A promissory note is used to record the financial details of personal loans, business loans, and real estate transactions. It is a legally binding contract which can be used in a court of law if the borrower defaults on the loan.


Personal promissory notes are the most common form of note payable and can be used when lending or borrowing money from friends or family, or to document the intended purchase of personal belongings such as jewelry, appliances, or vehicles. Depending on the amount of the loan, the lender may also request some sort of collateral to back the note.

When drafting the note it should clearly state how much the loan is for, the amount of interest being charged, and the dates which payments should be made. Most states have laws regarding the amount of interest lenders can charge.

When borrowing money from a bank or lending institution, a promissory note is almost always required. If the borrower defaults on the loan the lender has the right to demand full payment of the note. If the lender is unable to collect on the note they can place a lien against real property owned by the borrower or have their wages garnished. If this occurs, it will have a negative impact on the borrower's credit report.

Promissory notes that are considered "unsecured". This means that if the borrower defaults on the loan it is more difficult for the lender to collect. Although lenders can file a lien against the property and take legal action against the borrower, collection can be a lengthy and expensive process with no guarantee for repayment.


Why use a promissory note? Even though a lender trusts the borrower in good faith that he will be repaid, it is always good practice to get it in writing. Oral agreements can be misinterpreted or misremembered. Promissory notes are clear about the interest rates, due dates, late payment penalties, and other possible terms. A promissory note is also solid evidence that a loan has taken place, in case there is a dispute.

Types of Promissory Notes

Promissory notes come in a variety of types which may include:

• Balloon note. A promissory note that requires smaller payments early in the term of the loan and a large payment at the end of the loan term.

• Demand note. This type of promissory note has no fixed timetable for the payment of loan. It requires full payment of the loan upon demand by the lending party.

• Secured or unsecured promissory note. A secured note includes collateral which may be claimed by the lender upon non-payment. One of the classic examples is the mortgage loan where the home is provided as collateral is provided in case the loan is not paid.

• Master promissory note. Refers to the series of loans that can be made using this type of promissory note over an extended period of time.

Some people may feel offended when asked for a written promissory note. It is however, important to have a written agreement when dealing with personal loans because the relationship can be damaged when disagreements arise. Business loans on the other hand, can be easier to get in writing because it is less personal.


FAQ's on Promissory Note

• What is a promissory note?

A promissory note is evidence of a loan agreement that contains the terms of the agreement for the loan. This note also contains the promise to pay the loan on the agreed date. This promissory note or note payable can be used for a personal loan or commercial transactions.

• Who must sign the promissory note?

A loan agreement is signed by both parties but only the borrowing party needs to sign a promissory note. A witness need not sign but the note can be notarized as evidence that the borrower did sign the document.

• What is a secured promissory note?

Collateral, such as an interest in the borrower's property, is included in the promissory note. In case of a default in payment, the property can be sold to pay the lender.

• What is balloon promissory note?

This is a type of installment note where a series of smaller installment payments are made and a large payment is required towards the end of the loan.

• What is the maximum interest rate I can charge the borrower in a promissory note?

Usury laws dictate the maximum interest rates that can be charged by the lender to the borrower. This varies by state and local laws on interest rates should be checked.

• What can I do if there is a default on the note payable by the borrower?

You may choose to sue the borrower in small claims court. Promissory notes can be used as evidence of the loan default that can be use in a lawsuit related to breach of contract. A cognovits note provision can be included in which the borrower waives any defenses that could be raised by the lender.

• What is a master promissory note?

A master promissory consolidates multiple loans. An example of a master promissory note is a student loan where one can make multiple loans covering the time frame specified in the promissory note outline.
 
Personalize & Print a Free TX Last Will Download this Document
Page 1
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Page 9
Page 10
 
Personalize & Print a Free TX Living Will Download this Document
Page 1
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Related Articles:
Related Legal Services near Abbott, TX
Medlenka Law Firm PC
1903 Central Dr Ste 304
Bedford, TX 76021
(817) 685-9999
General Practice Attorneys, Attorneys, Legal Service Plans
The Vida Law Firm PLLC
3000 Central Dr
Bedford, TX 76021
(817) 358-9977
Attorneys,  Bankruptcy Services,  Bankruptcy Law Attorneys,  Financial Services,  Taxes-Consultants
Davis Leigh Warren
1901 Central Dr # 708
Bedford, TX 76021
(817) 868-9500
Attorneys, General Practice Attorneys
Jbb Immigration Law Firm
1909 Central Dr
Bedford, TX 76021
(817) 684-9500
Immigration Law Attorneys, Attorneys, General Practice Attorneys, Legal Service Plans
Miller Robert T
1244 Harwood Rd
Bedford, TX 76021
(817) 868-9400
General Practice Attorneys, Attorneys, Legal Service Plans
Parker McDonald Law
2317 Plaza Pkwy
Bedford, TX 76021
(817) 503-9200
Attorneys Referral & Information Service, Attorneys, Legal Service Plans
Carinhas Jack G Jr Law Offices
302 Kings Hwy
Brownsville, TX 78521
(956) 542-9161
Attorneys, General Practice Attorneys, Legal Service Plans
Touchy Law Firms LLC
2039 E Price Rd
Brownsville, TX 78521
(956) 847-8947
Personal Injury Law Attorneys, Attorneys, Legal Service Plans
Esquivel, Paul A. - Paul A. Esquivel
660 SW Military Dr Ste B
San Antonio, TX 78221
(210) 977-8887
Mark D. VanCleave, PLLC
606 Rollingbrook St # 1A
Baytown, TX 77521
(281) 303-8800
Attorneys,  Civil Litigation & Trial Law Attorneys,  Business Law Attorneys,  Personal Injury Law At
Barrett Campbell
2904 Highway 121 Suite 200
Bedford, TX 76021
(817) 657-8684
Attorneys, Family Law Attorneys, Wills, Trusts & Estate Planning Attorneys, General Practice Attorne
The Blenden Law Firm
2217 Harwood Rd
Bedford, TX 76021
(877) 249-8628
Attorneys, General Practice Attorneys, Legal Service Plans, Legal Clinics
Mary Holland
1833 Bedford Rd Ste B
Bedford, TX 76021
(817) 545-8576
Family Law Attorneys,  Adoption Law Attorneys,  Attorneys,  Wills, Trusts & Estate Planning Attorne
Goetz Kendall
1833 Bedford Rd
Bedford, TX 76021
(817) 545-8576
Attorneys, General Practice Attorneys
Kimberly A Mills Law Office
409 Harwood Rd
Bedford, TX 76021
(817) 581-8222
General Practice Attorneys, Legal Service Plans, Divorce Assistance, Attorneys, Family Law Attorneys
Lacy Jeff
1903 Central Dr # 308
Bedford, TX 76021
(817) 685-7996
General Practice Attorneys, Attorneys
Berry Chad
3001 Brown Trl
Bedford, TX 76021
(817) 281-7902
General Practice Attorneys, Attorneys
The Bonner Law Firm
4820 Old Spanish Trl
Houston, TX 77021
(713) 842-7700
Attorneys, General Practice Attorneys
Denise F Graves
4721 Garth Rd Ste C400
Baytown, TX 77521
(281) 839-7664
Criminal Law Attorneys, Attorneys, Legal Service Plans
Gray & Gray
1903 Central Drive, Suite 303
Bedford, TX 76021
(817) 354-7400
Criminal Law Attorneys, Immigration Law Attorneys, Juvenile Law Attorneys, Traffic Law Attorneys
Smith Robert H
3433 Gladstone Ln
Amarillo, TX 79121
(806) 379-6677
Attorneys, Legal Service Plans
Scott Richard
1903 Central Dr
Bedford, TX 76021
(817) 318-6655
Automobile Accident Attorneys,  Attorneys,  Accident & Property Damage Attorneys,  Personal Injury L
Myers & Porter LLP
2120 Parkwood Dr
Bedford, TX 76021
(817) 545-6394
Attorneys, General Practice Attorneys
Steven T Polino
3216 Prince Ct
Bedford, TX 76021
(817) 992-6359
Attorneys, Bankruptcy Law Attorneys
12Law.com   |  NASHVILLE, TN USA   |  CONTACT US