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How to Write an I.O.U. Letter

It is important to write an I.O.U. letter properly for the document to be considered legal binding. An I.O.U.

is a short version term which refers to a promissory note. A promissory note describes how one party is in debt to another party, giving details as to how and when the debt will be cleared. In the case of having to take a party to court to receive payment, the promissory note document needs to be as thorough as possible.

Identify the person who is in debt to the other party by listing the person's full name. Identify the party as the "Promisor" when the name reappears within the document. List the full name of the person who gave the loan, then refer to that person the "Promisee" within the rest of the document.

Skip two lines below the beginning of the promissory note and list details pertaining to the loan. List the dates it is supposed to be paid back, in certain agreed-upon amounts, and late fees if there are any.

List any additional terms to the loan on separate lines from each other. Describe which type of currency has been agreed upon and whether the promissory note is secured or unsecured. When a loan is "Secured," the party who was given the loan lists personal items, such as a vehicle, as collateral. If the loan payments are not made in time, the party who took out the loan would then have to surrender title, until completion of the payments.

Close the promissory note by having both the "Promisor" and the "Promisee" sign and date the document in front of a notary witness. Have the witness notarise the document as well to complete it. Give a copy to both parties for their records.


Look over your particular state's laws concerning the maximum amount of interest that can be charged on a loan before completing the document. Ignoring these state statutes may bring criminal offences. Visit the Attorney General's website to receive information regarding these state statutes.