Using a Debt Acknowledgement Form When Loaning Money

Loaning money to a friend can be a delicate issue. Though all those involved may want to act in good faith and trust that their friendship can endure a financial obligation, the reality is that their expectations may not be met. By using a debt acknowledgment form, both parties are simply looking out for everyone’s best interests and avoiding eventual misunderstandings.

Signing a Debt Acknowledgement Form

Misguided loyalty often results in people acting against their own best interests. This is never truer than when loaning a friend or loved one money. By signing a debt acknowledgment document, the terms of an arrangement can be clarified to ensure that a friendship isn’t adversely affected by a loan transaction. Though it may seem excessive, a debt acknowledgment form simply reflects that two or more people are engaging in a business transaction where both parties know where they stand. When loaning large amounts, it pays to know everyone’s legal rights and obligations.

Ensuring Both Parties Are Protected

A debt acknowledgment form does not simply ensure that the person loaning will get their money back, it is also proof that the money was lent and what the terms are for its return. When possible, a notarized agreement works best, or at least the presence of witnesses. Also, both parties should have a copy of the signed debt acknowledgment form for future reference and may wish to consider specifying a payment schedule, interest rates (if any), as well as a final payment date.

It’s probably safe to say that many relationships have been ruined because of money. Loaning money to a friend can, in fact, be a good deed but it shouldn’t go unrewarded. Both parties should guard their interests and protect the long-term stability of their friendship by acknowledging that money was in fact lent but that repayment is expected.