When a person borrows money from a lender, he agrees to return the debt in a specific period of time or in a specific manner i.e. short monthly installments and signs a promissory note that states he owes certain amount of money and the creditor has the right to collect the debt by all means if the debtor denies to repay the debt or goes bankrupt. When this actually happens and a debtor goes default on his payments of the promissory note, the creditor has every right to take legal action against him or include the guarantor as the responsible for the bad debt but before that, the creditor is legally obligated by the local laws and clauses of the promissory note to formally inform the debtor one last time and ask him to return the debt in a certain period of time i.e. 1 week or 1 month.
See Also: Promissory Notes
This is done by the notice of default in promissory note and if the debtor doesn’t respond to the notice within the given period of time, the creditor then has the right to file a case against him, cease his property as collateral or hold the guarantor responsible for the bad debt but all this is done if the debtor doesn’t respond to the notice before deadline.
Key elements to include in the Notice of Default in Promissory Note:
- Name of the debtor/defaulter with complete address
- Name of the creditor or loan company with address
- Details of the promissory note i.e. date etc
- Details of the payment of the debt or installments for the debt agreed by the debtor
- Details of the payments of the debt on which the debtor is defaulted
- Period of time in which the debtor is asked to contact the creditor and resolve the issue out of court
- Legal actions that will be taken against the debtor if he doesn’t respond to the notice i.e. ceasing of debtor’s property, filing case against him or holding the guarantor responsible
- Date when the notice is being signed
- Signature of the creditor (i.e. bank or loan company)
Here is preview of a Free Sample Notice of Default in Promissory Note created as fill-able PDF form,
Here is download link for this Notice of Default in Promissory Note,