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  #11  
Old 12-14-2005, 01:59 PM
bobbyi bobbyi is offline
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Default Re: Sample Loan Contract (USA)

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I am pretty sure if you write a check and put "Loan for XXX" in the for box that a copy of the check would hold up in a court.

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Sweet, I'm going to start putting that whenever a pay a bill. Boy will Verizon, etc., be surprised in a few years when I demand all that money back.
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  #12  
Old 12-14-2005, 02:11 PM
phish phish is offline
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Default Re: Sample Loan Contract (USA)

My only comment would be: Don't lend him the money unless you are perfectly okay with never seeing it again.
If he's a real friend, he wouldn't put you in this position.
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  #13  
Old 12-14-2005, 02:15 PM
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Default Re: Sample Loan Contract (USA)

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It's a very long story ... let's just say I am helping him pay back a debt, and he rather owe me money then someone else. The reason I am doing this is not important, as I already have thought this through. My friend has no personal property worth anything close to what the loan amount is. Collateral is not a big issue, as I trust them to pay me back, I am just interested to see if it is something I should look into.

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If he hasn't got anything then it isn't worth looking into. You could try to structure some interest in future earnings, future debts owed to him, later acquired property, etc, but from a practical standpoint, for a 15k loan, it's not worth the effort to do that. Just get a good solid promissory note with an attorney' fees clause and venue provision that lists the county you are in as the enforcement jurisdiction (in case he moves, you want to be able to sue him where YOU live, not where he lives).

If he defaults, sue him. It should be an easy judgment, then hit him with wage and bank account garnishments until he pays up or you crush it out of him. You know hat that will do to the friendship, but that's the risk you take.
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  #14  
Old 12-14-2005, 02:19 PM
prayformojo prayformojo is offline
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Default Re: Sample Loan Contract (USA)

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I was hoping someone could speak more on the issue of "collateral", as my friend does not really have anything worth close to the amount I am loaning. Car is owned by the parents, and they just recently graduated from college.

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In Canada, most provinces have General Security Agreements. I would be surprised if most states didn't have the same sort of agreement. Basically, a GSA gives you a security interest in all assets owned at the time of the agreement, and in all assets later acquired. So if you give him 5 years to pay the loan, and in that time he improves his lot in life and gets himself some bling (legal term) but doesn't pay you back, you have first shot at taking his stuff in lieu of your money. This is definitely the sort of thing you would want a lawyer or other qualified professional to draw up, and you may want to insist on him getting independent legal advice when he signs it.

Oh, and try to keep "trust" out of lending arrangements. I know that's the sort of statement that gives lawyers a bad name, but think about this. Protecting your interest isn't just a matter of forcing him to pay if he refuses: it's a means of ensuring your place in line if he owes money to more than one person or organization. If before he pays you back, he gets money from someone else, or grants a security interest, or gets a mortgage, or has a court judgment registered against him, you'll be last to get paid. He'll want to pay you back, he'll want to be a good friend, but the law will snatch your money out of his hands and put it into the coffers of the bank that had the sense to get proper security.
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  #15  
Old 12-14-2005, 02:26 PM
Chadt74 Chadt74 is offline
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Default Re: Sample Loan Contract (USA)

If you want a template I can send you one that has a little more verbage than you probabaly need but would make for a good read to get you going.

PM me if you are interested.
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  #16  
Old 12-14-2005, 02:33 PM
phish phish is offline
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Default Re: Sample Loan Contract (USA)

The last few posts are legally sound and all, but I wonder from a practical point of view, are they really relevant. If he moves out of state, are you really going to pursue it. Five years from now, are you really going to pursue it? If he just avoids you in a few months and has no real assets but a small income, what are you going to do. Garnish his wages and get $5 a week? Get real. If he owes some bad people money and has no way of paying except to go to you, why would you think he'll be in a better position to pay you in the near future?
Tell him to open up a few credit cards, max those out and declare bankrupcy.
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  #17  
Old 12-14-2005, 04:21 PM
stupidsucker stupidsucker is offline
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Default Re: Sample Loan Contract (USA)

Tell him to open up a few credit cards, max those out and declare bankrupcy.

I am fairly certain bankrupcy will cover what he owes the OP as well. Also federal law states that in 7 years from the day of the last payment he makes the debt is void... even if he hasnt paid it all. As long as you get him to pay at least a little bit then it renews for another 7 years.

I am unsure of the real facts, but I also think that you are NOT allowed to charge interest. You are allowed to charge a flat fiance fee though.

Everything I said is hearsay for the most part, but I think the info is legit.
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  #18  
Old 12-14-2005, 04:34 PM
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Default Re: Sample Loan Contract (USA)

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The last few posts are legally sound and all, but I wonder from a practical point of view, are they really relevant.

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not really. That's why I said it wasn't really worth it on a 15k loan. He could get a security agreement and file a financing statement with the Dept of Licensing in his state, but he would still have to sue to enforce that agreement. For 15,000 (or less by the time the guy defaults) it just isn't worth the extra hassle. In a garnishment, you can empty the guy's bank accounts if you know where he banks, and you can get 25% of his disposable income. That isn't much, and often the cost of the garnishment exceeds the amount you bring in. Plus, they are complicated, at least here in Washington. He should get a decent promissory note and just go with that.

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Tell him to open up a few credit cards, max those out and declare bankrupcy.

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You're kidding, right?
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  #19  
Old 12-14-2005, 09:03 PM
Guthrie Guthrie is offline
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Default Re: Sample Loan Contract (USA)

In answer to your original question: You can get pre-printed forms for such at Office Depot, Staples, or whatever you have in your area. If you don't want to spend the money, you can find plenty of books of forms at the library.

If you can afford to loan someone $15K, you should probably fork over another couple of hundred and pay a lawyer to draft a proper agreement.

I'm not a lawyer, but I've been through the legal wringer many times, and I can tell you without hesitation that anything you get in writing is better than nothing. I've seen scraps of paper, napkins, and doodling admitted as evidence and hold up.

Even if he has no collateral, and there's a good chance the loan will be uncollectible, you still want to get in in writing. If your friend dies, you have a claim against the estate. If he has any assets at the time of death, life insurance, or a claim against the drunk driver who killed him, you may ultimately collect some money. A verbal agreement is fairly useless in these cases.

If he files bankruptcy, your written loan agreement won't get you any cash if he has none, but you may find yourself with a nice tax deduction. There may be all kinds of qualifications on this regarding your relationship, the nature of the loan, and the relative timeline, but it can't hurt to get it in writing up front.
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