Promissory notes create a clear agreement: one person lends money, and the other person promises to repay it. These agreements are often used between friends, business partners, and family members, and they can feel simple and trustworthy. But when the borrower suddenly says they can’t pay anymore, the lender is left in a stressful—and often confusing—position.
In New York, lenders have strong rights when someone defaults on a promissory note. The key is knowing what steps to take and how to protect yourself early. With the right approach, and with help from experienced attorneys like Warner & Scheuerman, you can improve your chances of recovering what you’re owed.
Start With Clear Communication
When a borrower first claims they can’t pay, many lenders react with frustration or panic. But the first step is to stay calm and ask questions. Sometimes the borrower is dealing with a temporary hardship, like a lost job or medical expenses. Other times, they may be trying to avoid repayment entirely.
It helps to understand what caused the problem and whether the borrower expects to get back on track. If the issue is short-term, you may be able to work out a temporary solution. If the borrower avoids the conversation or gives vague answers, that may be a sign that stronger steps are needed.
Review the Promissory Note
Before making any decisions, take another look at the original promissory note. Many people forget what the document actually says. Important parts of the note often include the payment schedule, the interest rate, and what happens if the borrower misses payments. Some notes even contain an acceleration clause, which allows the lender to demand the full amount immediately after default.
Understanding your rights under the agreement helps you decide how to respond. An attorney can also review the note and explain what options you have under New York law.
Explore Whether a Payment Plan Is Possible
If the borrower’s financial problems are real but temporary, it might make sense to negotiate a payment plan or reduced monthly payment. Some lenders choose to extend the deadline or allow interest-only payments for a short period.
If you do agree to changes, always put them in writing. Verbal agreements are risky, especially if the borrower falls behind again later. A written amendment protects you by showing the exact terms both parties agreed to.
Take Action If the Borrower Stops Communicating
One of the biggest mistakes lenders make is waiting too long. When borrowers stop responding, stop making payments, or keep making excuses, delays can make the situation worse. Debtors may move assets, switch jobs, or change bank accounts if they believe legal action is coming.
Acting quickly is important. If communication breaks down or the borrower refuses to cooperate, it may be time to discuss legal action with an attorney.
Filing a Lawsuit on the Promissory Note
If the borrower will not pay, the next step is usually to file a lawsuit to enforce the promissory note. New York judges take these agreements seriously. To win, the lender generally needs to show the signed note, proof of the loan, and evidence that the borrower has not kept their promise.
Once the court enters a judgment, you can start using enforcement tools to collect. This is often where lenders first realize that collecting money is very different from simply winning the case.
The attorneys at Warner & Scheuerman help lenders through both parts of the process—obtaining the judgment and enforcing it.
Using Judgment Enforcement Tools
If a borrower claims they can’t pay, judgment enforcement can reveal whether that is actually true. In New York, creditors can use a wide range of tools to collect, including wage garnishment, bank account restraints, and property liens. These tools allow creditors to reach income or assets even when the borrower refuses to cooperate.
If the borrower truly has limited income or exempt assets, collection may be slower. But New York judgments last for 20 years, giving creditors a long time to recover what they are owed.
What If the Borrower Really Can’t Pay?
Sometimes borrowers really don’t have the money. They may be unemployed, ill, or living on exempt income such as Social Security. Even when this happens, it does not mean the lender has no options. A judgment can remain in place for two decades, and interest continues to grow over time. If the borrower later gains employment, receives an inheritance, buys property, or opens new accounts, you may still be able to collect.
How Warner & Scheuerman Can Help
Trying to enforce a promissory note on your own can be stressful and time-consuming. Warner & Scheuerman can review the note, prepare the lawsuit, obtain the judgment, and locate assets the borrower may not be sharing. Their experience with New York judgment enforcement gives lenders a much stronger chance of recovering what they are owed.
Final Thoughts
When a borrower claims they cannot repay a promissory note, you are not powerless. By communicating clearly, understanding your rights, taking timely action, and relying on experienced legal support, you can protect yourself and work toward recovering the full amount owed. Firms like Warner & Scheuerman can guide you through the process and help ensure that a borrower’s refusal—or inability—to pay does not end the story.