Making Deals 101: It’s The Paperwork, Dummy!

If you’ve been given the runaround when it comes to collecting money owed you, we’d like to help.

Today we’re going to discuss how you can protect yourself when lending money. As the old adage says, an ounce of prevention is worth a pound of cure.

First and foremost when you make deals regarding money, get those deals in writing. If you are renting out a house or an apartment, make sure you have your renters read and sign the contract. Put in black and white their obligations to you and yours to them. Is it a relative or a friend? No matter, you still need to make sure that this person signs the contract. Are you selling goods or services to an individual? The same rules apply. If you are not going to be paid up front before you perform the service or deliver the good, then you should always have an agreement in writing that very clearly states what you expect to receive from that person and then you should make sure it’s dated and signed. To be even safer, you should get the paperwork notarized. This is called a promissory note.

You may feel embarrassed asking friends and family to go to all the trouble of signing this document, you (and they) may feel it implies that you don’t trust them, but if you really are concerned about ensuring you get your money back, this is an extremely important step to take. You will just have to grin and bear it, and if they are not willing to sign the document, you probably should not lend to them.

The fact is, if you don’t have some proof of your agreement, it can be very difficult, even impossible for a collections agency to do anything to recover the money owed you. So do yourself and us a favor and get the agreement in writing, as well as getting it signed.