Making legal documents for verbal agreement

If this is just a loan with simple interest and level payments, no collateral, no fancy terms, etc., you may just need a simple promissory note. You may need other documents as well. What to do and what documents may be necessary or advisable will depend on how much money is involved, what is the interest rate, the payment schedule, amortization, collateral, etc.

There are specific basic elements that must be present in a promissory note (for example, the amount of the loan, interest rate, amount of the payments, when payments are made, maturity date, signature and date of the note) and there may be legal limitations on certain things like the interest rate. You may want to see an attorney, just to be safe and make sure you are complying with all applicable requirements for your locale. An attorney could probably prepare a simple note very easily and for a reasonable fee and you would be more likely to have an enforceable instrument. Another alternative is to find an online source for legal forms. However, I would nonethtless advise you to take the completed form to an attorney to have it checked over. A few dollars spent wisely on legal advice could save you a lot down the road.

You also asked about security. Again (sorry to sound like a broken record) - it depends on a lot of things, including how big is the loan (is it worth securing) and what kind of collateral does the borrower have. If you will be securing the loan with collateral, please see an attorney.

Bankruptcy of the borrower is beyond the scope of this forum. It is very complex and there are too many variables to give you a good answer. If this loan is substantial and bankruptcy is a real possibility, you really do need to see a creditors' rights attorney.

Finally, if the borrower will not sign a document for the loan, then depending on the laws in your state you may have an enforceable verbal contract. If not, you may still have some remedies if you can show a court that it would be inequitable not to require repayment of the loan. Such evidence may include proof that the loan was made, that the borrower made some payments, that terms were agreed upon, etc.

Good luck with this.


NOTE: This post does not create an attorney-client relationship and does not constitute legal advice. This information is for general reference purposes only. If you have questions, please consult an attorney in your jurisdiction.