Create a simple IOU form with our template to create the basis of an informal loan agreement. Ensure all the correct details when creating your form.
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Is the debtor a person or a business? Is the debtor a person or a business? IndividualLast Update August 25th, 2024
Debt Acknowledgment Form
Informal Loan Agreement
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Table of Contents:An IOU is an informal loan agreement between a lender and a borrower. It puts the debt in writing, and the person who borrows your money has a responsibility to pay it back.
An IOU is sometimes referred to as:
Many times this document is used between 2 people with a previous relationship. Even though it is not considered formal, the agreement can be enforceable and used in court.
An I Owe You states the amount of money borrowed and when it needs to be paid back by the borrower.
Using a simple IOU form to complete every type of agreement is not recommendable. It is a much more informal type of loan agreement and shouldn’t be used for formal transactions.
However, an IOU is the best option in certain moments, for example:
Using an IOU or not, depends on the relationship you have with the borrower. This document is often reserved for family members, friends, and coworkers.
If you do not use an IOU, you may have trouble getting your money back. This can cause strain in your relationship with the borrower as well as a legal dispute.
LawDistrict has templates of IOU forms in PDF available to help you write your agreement.
You can create your own IOU document with the help of our free printable IOU template.
Afterwards, follow these step-by-step instructions to know exactly what should be in an IOU letter, and review your document with an attorney:
Fill in the names of the people borrowing and loaning the money. Then include the amount of money being loaned. Add any interest in the amount that must be returned.
Write the name of the borrower, and add that he or she will pay back the full amount. Include the choices of paying the loan back in partial or full payments. If it is partial, mention the frequency of payments.
Include a declaration that states both parties are bound to the agreement. Write the date the agreement is going to take place.
Write your name and the name of the borrower, and then sign the document. In addition, include the name and signature of any witness, including a notary public.
If you are planning to loan your money to someone who needs it, it is essential that you ensure you will get your money back.
There are different types of agreements and legal documents that can be used for this purpose.
Besides an IOU, a Loan Agreement and a Promissory Note include a promise from a borrower to repay the loan in full.
Review the table below to better understand the 3 documents.
| IOU | Promissory Note | Loan Agreement |
|---|---|---|
| Includes only basic information such as names and loan amount | Ideal for paying over a longer period of time | Includes the right to transfer the debt |
| Ideal for agreements between family and friends | Information about any collateral | It can be repaid in installments |
| It is the simplest to write | There are Secured and Unsecured Promissory Notes | Includes details about the consequences of defaulting. |
To give you a good idea of how to write the form, we have included a sample of the document below.
Then, use our free IOU template to help you fill in your form.
There are similar documents that may be helpful to you and your finances if you are interested in an IOU form.
These documents include:
Using LawDistrict, learn more about how these financial templates can assist you go through your legal process.
An IOU is not always simple to understand. That is why we’ve included answers to some of the most common questions about IOUs.
Answering these doubts, we intend to provide you with further information to make the writing process easier.
It can be more difficult to enforce this agreement due to its informality. Outlining all the names, amount of the loan, and obligations will make the IOU enforceable and a binding agreement.
Depending on the state, your IOU may need to be signed by a witness. Even if it is not required, it is a good idea to have it signed by a witness or a notary public.
If the document is signed and states the amount of money that is owed, the borrower will be legally required to pay that amount back.
You are only a few steps away from your own IOU !
Download our professional examplesI, the undersigned, _________ (The "Debtor"), hereby confirm to _________ (The "Creditor"), that I owe such Creditor a debt in the amount of $_________ dollars as of the date set forth herein. The amount includes each and every one of the legally permitted charges, including accrued interest, up to the date stipulated in this document.
I acknowledge and agree that I incurred said Debt, and I am solely responsible for the repayment of it to the Creditor. I acknowledge having incurred said Debt, and I declare myself solely responsible for its payment to the Creditor. I also agree and acknowledge that the Creditor's filing of this document in a court of law as an admission of judgment on my part (where legally permissible), leaves me defenseless before such Court.
I have promised and agreed to the entire payment of the amount of said Debt on or before _________.
Both the Creditor(s) and the Debtor(s) have signed this document on _________ in front of the Witnesses named below.
Debtor's Signature:
By: ___________________________________ Date: __________________
_________
Creditor's Signature:
By: ___________________________________ Date: __________________
_________
I ____________________________, a Notary Public in and for said County and State, hereby certify that _________ and _________, whose name(s) is/are signed to the foregoing instrument, and who is/are known to me (or satisfactorily proven), acknowledged before me on this day that, being informed of the contents of the instrument, she/he/they executed the same voluntarily on the day the same bears date. Given under my hand this ________ day of ________________, ________.
__________________________(Notary Public Signature)
Notary Public
My commission expires: __________________________
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