Loan of money: in which cases should an acknowledgement of debt be written?

Recognition of debt is a document by which a person, « the debtor, » acknowledges that he owes a sum of money to another person, « the creditor. » This act may be drafted freely by the parties. However, in order to be valid, it must contain certain essential particulars, in particular the amount of the sum due, the methods of repayment and the signature of the debtor.

According to Article 1359 of the Civil Code, all loans over €1,500 must be in writing. This obligation is intended to protect the parties and to avoid disputes in the event of disagreement on the terms of reimbursement.

This writing can take several forms:

• be drafted under private seal, i.e. without the intervention of a notary;
• be drawn up by authentic instrument before a notary, for greater legal certainty.

Even when the amount loaned is less than 1,500 €, writing remains highly recommended. This is proof of the remittance of funds, the purpose of the remittance (loan and non-donation) and facilitates the recovery of the loan in case of dispute.

Moreover, certain loans between individuals may give rise to a tax formality. When the total amount of loans granted to the same borrower exceeds €5,000 in a year, these loans must be reported to the tax authorities using the form 2062, attached to the tax return.