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If you lent money or plan to do so, you should know that supporting the debt is important to be able to collect it later. For this, many people or financial institutions use a promissory note to have a physical document that legally proves that there is an economic obligation that the debtor must pay.
However, despite having committed to pay, there are people who do not fulfill the promise to pay within the established period, thinking that they can postpone the debt until it reaches a point where it cannot be collected, without knowing what to collect. promissory note is possible, it has legal repercussions and can be very expensive for the debtor.
Today on the LEX & CO blog we will tell you what it is and how to collect a promissory note, stay and read and know your rights.
A promissory note is a credit instrument through which the right to collect the stated amount is granted, and the specific term, the amount of the payments, if they are in installments, and the duration of the debt can be specified.
Promissory notes are legal agreements in which the debtor agrees in writing to return the money on the agreed date. In these documents, the person who owes the money is called the subscriber and the person who collects is called the holder or beneficiary.
Unlike other legal figures to guarantee compliance with payment, such as the mortgage, the letter or the bond, the promissory note is a credit title provided for in the General Law of Credit Titles and Operations, which regulates the issuance of promissory notes and establishes the legal framework to issue and collect them.
This law indicates that the promissory note is an autonomous document, which exists independently of the act or business from which it is derived. It also establishes that the promissory note is an enforceable instrument in which the holder may exercise his right to obtain payment in the event of default, which could lead to an seizure of the subscriber’s assets to cover the amount of the debt.
Promissory notes are similar to checks because they are securities that stipulate an amount of money to be collected. However, unlike a check, the promissory note has a date from which collection can be made effective, ranging from six to 36 months after the date of issue, but it may be less depending on the agreement between the subscriber and the fork.
This is where the importance of the promissory note lies, since it guarantees that the rights and obligations of both parties will be respected: on the one hand, the subscriber’s period to cover his debt and, on the other, the legal consequences of not paying.
For this reason, the promissory note is common in commercial contracts and uncommon between individuals.
The General Law of Credit Titles and Operations establishes that for a promissory note to be valid it must have the following elements:
Additionally, in some cases other documents are required such as:
At the time of signing the promissory note, the expiration date agreed upon by both parties must be established. If it is not paid on time, the beneficiary has three years to demand payment through court.
This is established in Article 165 of the General Law of Credit Titles and Operations and is known as exchange action, which is applied in case of non-payment by the subscriber or a partial payment that does not cover all of their debt.
In general, it is recommended that the holder not wait more than three years from the maturity date of the promissory note to initiate the lawsuit through the Commercial Executive route, which is an agile procedure, which allows the debtor’s assets to be seized to cover the amount. of payment.
For its part, the holder can claim payment of default interest that has accumulated up to the time of initiating the lawsuit, or a legal interest of 6% per year if it was not contemplated when drafting the promissory note.
It is important to clarify that when an expiration date is not established, what is known as a demand promissory note, the period for prescription begins to be computed six months after the credit instrument was signed.
This means that the statute of limitations for a demand note is three years and six months. Only in some exceptions, in which the debtor extends the term of the debt, will the promissory note expire in five years.
It is advisable to avoid demand promissory notes and establish specific maturity dates to have a clearer legal framework.
Promissory notes are classified based on the type of issuer, the method of payment, or the time of payment. Let’s know the types:
Collecting a promissory note can be a complex process, so it is important to take the necessary steps to increase your chances of getting your money back:
Before expiration, verify the validity of the promissory note: that it contains all the elements, the name of the subscriber, date and place of payment, among others. Remind the debtor of their payment obligation through written means, phone calls, text messages, among others.
After the due date, if the debtor has not paid, present the note or transmit written notices. Request payment through established means and offer other options, such as partial payments, deferrals or a debt refinancing.
Yes. You can negotiate a payment agreement with the debtor with a new schedule and conditions. In fact, negotiation can be a beneficial alternative for both the creditor and the debtor, since it allows reaching an agreement that satisfies the needs of both parties and avoids the need to initiate a costly and lengthy legal process.
These negotiations can be of the following forms:
The holder of the note can contact the debtor or subscriber and personally negotiate new payment terms. For example, fixed monthly payments with frozen interest.
Once an agreement has been reached, it is important to formalize it in writing to avoid confusion or misunderstandings in the future. The agreement should include all the terms of the agreement, such as the amount to be paid, the payment schedule, the interest rates, and the consequences of default.
A new promissory note or other security could even be considered to guarantee that the debtor will cover the debt.
If the debtor cannot collect the promissory note because the debtor is hiding or does not want to negotiate, the holder can initiate a legal process by contacting a lawyer and collecting the promissory note and the documentation that the debtor presented when acquiring the debt.
The complaint must include a detailed description of the facts of the case, the amount being claimed, and the legal basis for the claim. Therefore, it is essential to go to a lawyer specialized in commercial law to present the claim in the correct terms.
If amicable negotiation is not successful, the next step is to take legal action to collect the note. In this case, it is important to have the advice of a lawyer specialized in commercial law.
Your lawyer must initiate a Commercial Executive Trial and file a lawsuit, which is viable when the promissory note is less than three years past due and there is the necessary evidence to file the lawsuit, and there is only one hearing with the Judge.
At the hearing with the Judge or summons, the debtor must make payment for the amount of the promissory note. Otherwise, the assets that the debtor indicated as collateral when signing the document and that can be seized in order to guarantee payment of the debt plus legal interest of 6% per year will be indicated.
Now, if you want to collect a promissory note after the due date, you can do so through the Ordinary Commercial route, where the procedure is prolonged and the evidence can be presented in several hearings, and if the debtor continues to refuse to pay, the seizure would come. at the end of the trial during the execution of the sentence.
Even though they signed a promissory note and read a contract, there are people who do not make their payments and try to postpone the debt thinking that it will expire. However, failing to pay a promissory note has legal repercussions.
In the event of non-payment or partial payments, the holder of the promissory note may proceed to court to claim payment from the subscriber or debtor, or from his or her guarantors.
Some companies sell the securities to other companies or legal entities that are responsible for collecting the debt, default interest and other derived expenses.
If you lent money, have overdue promissory notes and do not know how to collect them, you should know that you are not alone. At LEX & CO, insurance lawyers, we know that filing a lawsuit for this issue or for a bond collection, vindicatory action or foreclosure is complex, so we recommend you to contact our tax lawyers at 5568401076, email firma.lex.co@gmail.com, or write us through our contact form or WhatsApp, we will gladly assist you.
Carlos Figueroa Rodríguez, attorney at law at Lex & Co. He has more than 10 years of experience in specialized cases involving insurance claims and medical malpractice. He is a graduate of the Universidad Anáhuac and has a Master’s Degree in Constitutional Law and Amparo from the National Bar Association. He also has a Doctorate in Juridical Sciences from the UCI Mexico. Professional license 6577215.
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