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hi I'm Michele welcome back to finally revealed in this episode I want to back up a little bit and talk about a promissory note I talked about when you should get one and I realized some people might not know what it exactly is a promissory and it's PR o mi SS o ry not promissory like some people say but a promissory note is a document a piece of paper is nothing special it can be typed or handwritten it stems from the old-fashioned IOU and that is what that means I loan you money you owe me you you loan me money I owe you and I would write I owe you five dollars and sign my name Michelle and hand it to you and then you would have that to say hey I'm coming to collect you owe me five bucks give it fork it over well there are rules on when you need to have one for example for the statute of frauds which is covered on another video if you have an obligation or something that you went to in for somebody has borrowed a significant amount it has to be in writing if you want to force them to pay you back but I for amounts smaller than that you don't have to have a promissory note and if you want to go on the old-fashioned handshake even if you have to sue somebody to collect the money you still can now it's going to mean that you have to prove it you're going to have to prove that the money was loaned you're going to have to prove what the terms were to pay it back and and how much they paid you and how much they still owe you so you can you can do that but a promissory note will I think it's good for several things number one if you really want the money to be paid back to you then you should have it in writing it's some something about people signing something that makes it official just between you and I'm not saying that anyone's trying to skip out on you it's just that it seems that when you sign something and there's a lot of zeros if it's maybe it's $1,000 and that's a lot of money if somebody is signing this then they realize that this is not a gift and you're not going to forget that they you expect them to pay you back so the other thing if you are the one paying the money back that is helpful to have a promissory note is because you want to know what the terms are that you are going to fulfill to repay the money and how much you're going to pay them back are you going to pay interest what's the interest rate and how much exactly is that going to be when are you expected to pay them back how are you going to pay them back is it going to be by cheque or debit or cash and on what day and at what address are you going to just deposit it in their bank are you going to do it by an ACH are you going to do a wire transfer most banks now I think you can go in online and just send money and are you going to write a cheque so you want that's helpful to you too because then you can track it and make sure that you don't pay too much and that they get their money back and you've satisfied the obligation now there are other things that you can add into the promissory note it doesn't have to be in any particular fancy format but the information you want on there is the date the amount that's loaned how it's going to be paid back is it going to be paid back all at once and if so when there's such a thing called on-demand so I could loan you $5,000 you sign a promissory note and I say you know Joe you're going to pay me 10 percent interest on this $5,000 and then again you can pay me the interest once a month or just wait and you pay me the whole amount I loan to plus the interest when it's due or when I demand it which means how am I going to demand it I'll call you up send you a letter send you an email I need the money by Friday you know what what are you what is the expectation so you want to have how it's going to be paid back how much is going to be paid back is there an interest rate what's the interest rate then are you going to make monthly payments and are there is there a situation where you can call the whole found even though they're making monthly payments are you going to allow them to be late how late can they be before you say you know what deal is off and I want all the money and I have the right to know demand all of the money back from you and that would be in a default provision if you are if it's a significant amount of money and you are going to have to sue them in the promissory note you can provide that if that happens they have to pay your cost your attorneys fees and they have to pay the court costs and you can put that in there and in fact in most places I will check this and put it on the website if if it's different but in most places you have to have it in writing and agreed between the two of you or if they default and you have to go chase them and sue them and pay an attorney that's just an extra cost that you're going to have to expend on your own and there's no obligation for them to have to pay that back to you and that's money that you're going to have to pay in advance before you even get a judgment and even get your money back so these are these are things for you to think about and if it is a significant amount of money to you and you want to specify how it's going to be repaid so you can count on that coming back to you at a certain time then you probably want a promissory note so I hope this is helpful to you if it was leave me a comment if you have any questions or anything about anything I've said leave it in the comments or send an email and I hope you will subscribe and I'll see you next time