Acknowledgements of debt in Switzerland: how to draft them and free letter templates
You want to lend money to someone privately or to a relative’s business.
A friend, a family member or your husband/wife needs money quickly to overcome financial difficulties or to buy something like a car. They ask you for a private loan or a loan to their business. Loans between individuals or between spouses allow some people to bypass banks that would turn down their loan application because they do not meet the conditions for obtaining a loan in Switzerland, while others want a procedure to simplify and pay less interest than with bank loans.
Good reasons to protect yourself
As a general rule, a verbal agreement is made, and too often, since it is a relative, the usual precautions are neglected. But what happens if you have to go to court due to repeated and prolonged late payments, or worse still, if your debtor breaks their word by refusing to acknowledge the debt? Without an authentic act, you run the risk of embarking on a long and costly legal procedure without any guarantee that the outcome will be to your advantage. In the absence of an acknowledgement of debt, how can you prove that it is a loan and not a gift?
If a loan agreed between married spouses has not been formalised by an acknowledgement of debt, in the event of a divorce or death, it could be construed as a gift.
With a proper acknowledgement of debt, the procedure will be quick and nothing will be able to challenge your right to repayment before the courts.
Articles of law
2 articles of law cover acknowledgements of debt:
- Article 82 LP (Federal law on debt collection and bankruptcy). It states that « a creditor whose claim is based on an acknowledgement of debt recorded in an authentic or private (signature) act may request the provisional release of the opposition ».
- The Swiss code of obligations concerning consumer Loans, p. 220, Chapter II, Articles 312 to 318
What is not an acknowledgement of debt
If the purpose of the loan was to acquire a consumer item (car, furniture, etc.), a simple invoice in your possession will not constitute proof under the law. Contrary to certain beliefs, an email will also have no legal value in a court of law.
The main points of the document
You must therefore record the verbal agreement in writing in a loan agreement. Make sure that the commitment to pay is not conditional on anything or subject to any reserves.
The following are the mandatory items to be included in the acknowledgement of debt:
- Surname and first name of the debtor and the creditor
- Sum of money – written in letters and numbers
Make sure that the amount is clearly stated without the judge having to make a learned calculation to determine it. Otherwise, the request for release could be rejected
- Loan maturity
When you decide to initiate the proceedings, the debt must necessarily be due and payable.
- Handwritten signature
The person must be an adult and in full possession of their faculties (mental or physical). If it is a legal entity, check with the commercial register that the signatory officially represents the company. The signature must be handwritten and properly legible.
- Number of copies: 2
- Purpose of the loan
In order to be entitled to interest on the amount due, you are required to specify this in writing. In which case you will have to take into account that the maximum authorised rate for consumer loans is 10%. Apart from that, there are no specific rules.
- Repayment terms and conditions
You can detail a schedule with the amounts to be repaid monthly.
It is possible use a pledge, mortgage, etc. as security.
- Late payment penalties
You can agree on late payment penalties, in the form of interest for example.
Statute of limitations
The statutory limitation period is normally 10 years. For married couples, the period remains frozen during the marriage, the counter only starts when the marriage comes to an end.
If you have any doubts about the drafting or the legal implications of the authentic act, we recommend that you seek legal advice.
- Categories: How to obtain your loan