Everything started out so well. You had a friend, relative, or client that seemed to be on the up-and-up, but cash was tight and they needed a little help. You had a little extra and saw an opportunity to make a bit more interest than the banks were offering.
Then things took a turn for the worse. The person you loaned the money to all of a sudden wasn’t so reputable after all. You’re not exactly sure whether you were lied to or not, but the payments on that loan have stopped coming.
Luckily, you hold a promissory note stating all of the details of the agreement. But how do you even start the process of figuring out how to get your money back? Is it even possible?
Know the Details
The very first step in attempting to recover any type of promissory note is to make sure that you read and understand all of the terms and conditions that are specific to that note. If you were smart when you issued it, there should be quite a few spelled out in the agreement.
You also need to understand all of the rules and regulations that the state and federal government have in place regarding promissory notes. Specifically, you will need to make sure that the note is not already outside the statute of limitations for such debts.
Contact the Debtor
Once you have all of your ducks in a row with respect to the details of the promissory note, the next step is to attempt to contact the debtor to work out some type of payment plan. In situations where you knew the debtor personally, this can be very difficult emotionally. Make sure that you are able to stay professional.
When attempting to contact the debtor either by telephone or written letter, you should be sure to follow all of the rules and regulations that apply. This means making phone calls only during reasonable business hours and avoiding any wording that might be considered threatening.
Hire a Collection Agency
In addition to being emotionally frustrating for many people, getting stuck on a promissory note can also be a major distraction that takes you away from more important things in your life or business. One way to handle the situation is to take yourself completely out of the picture by hiring a commercial debt collection agency to pursue the debtor.
The agency you hire will likely bring extensive collections experience to the table, which will help you avoid any rookie mistakes. The agency may also have their own legal team, which can help out tremendously should legal action need to be taken.
At the end of the day, your life, business, and peace of mind need to come before any outstanding debt. The small percentage that you pay to a collection agency often pales in comparison to the hassle of collecting an outstanding promissory note.
If you fail to reach a payment agreement with the debtor and still feel that you are within your legal rights to expect payment, the next step is to file charges with your local courts. This is where things get a little bit more complicated, so you might want to consider hiring a lawyer to navigate the legal terminologies for you.
The goal of any legal action is to obtain a judgement against the debtor that will ensure that there is legal documentation of the outstanding debt. This may even allow you to garnish the debtor’s future wages.