Always Get That Debt in Writing.
If you have ever taken out a loan, you know the paperwork involved. If it is a mortgage, there is even more paperwork. All that paperwork is to ensure that if you fail to pay back the borrowed money, the entity that loaned you money can get its money back. Think the same way if you ever need to loan money to someone.
Unfortunately, not everyone thinks that far in advance. In a recent Massachusetts Appeals Court decision, Filbey v. Carr (AC 19-P-978), the Plaintiff made the error of loaning $332,000 to Defendant. The Parties were dating, and Plaintiff loaned the money to renovated Defendant’s house. Once renovated, they would sell the house, pay off the loan, and buy a new house.
As you can guess, the Parties had a falling out. (see my other blog article “But I’m just going into business with my friend.”) The Plaintiff tried to retroactively memorialize the loan by getting the Defendant to sign a promissory note. That did not work out, and the Plaintiff had to sue. Now, almost five years later, she finally has a judgment.
The common complaint from clients is that it costs money to hire an attorney and have them draft loan documents. My reply is always the same – spending a few hundred dollars is always cheaper than the thousands you will spend in litigation (and possibly appeal).
I help clients draft promissory notes, mortgages, credit applications, installment agreements, and other loan documents to protect the client’s money they loan out. I make sure the loan documents not only protect the client but provide a means to collect on that debt. I make sure my client is protected, and there is little chance of going to the Appeals Court to collect.