How Do I Use a Promissory Note to Pay My Debt?


Dear Steve,

So ill try be short and straight to the point:

I have a massive debt, got scammed recently, have a loan amount owing close to 30000 AUD. These are 3 different lenders. I want to use a promissory note to pay the debt but just wanted to get all the information on how you were able to pay off your debt.

I got a promissory note lined up for these lenders I just wanted relevant information when it comes to giving this promissory note how can I effectively prepare for it for a smooth transition and how to cover all angles that need to be covered.

Please get back to me, id love to talk in person would be a lot easier.



Dear Brendon,

I admit my expertise is lacking when it comes to specific Australian regulations. However, on inspection, it appears the underlying issue is something I can address, the promissory note.

If your creditor agreed to accept a promissory note as the payee, then it could be used. However, I don’t see how that would extinguish the debt until it is fully repaid in accordance with the mutually agreed terms of the promissory note.

Your questions sound like the case between ANZ and a debtor.

In (Australia and New Zealand Banking Group Ltd v Evans; Evans v Esanda Finance Corporation Ltd [2016] NSWSC 1742) the consumer delivered a promissory note to the lender that claimed to be the amount owed by underlying debt.

“The purported Promissory Note also included a statement to the effect that ANZ would be bound by the terms and conditions attached to the Promissory Note if it failed to return the Promissory Note within 3 days.

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The terms and conditions attached to the purported Promissory Note included terms to the effect that ANZ would be in breach of the Promissory Note if it failed to return the Promissory Note and thereafter continued with its attempts to recover the debt owed to it by Mr and Mrs Evans. In relying upon these terms and conditions, Mr Evans sought orders against ANZ, including the following: “Pursuant to the terms and conditions in the default and liability clause and notice of the six not negotiable contracts, [ANZ] is liable to [Mr and Mrs Evans] of an award for breach of contract for the total sum of $7,339,600 Australian as at 5 February 2016 for breach of the NOT NEGOTIABLE [Promissory Note].” (sic)” – Source

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The Supreme Court in Australia did not fall for this tactic.

“Garling J determined that the claims made against ANZ in relation to the Promissory Notes were “a nonsense”. Garling J further described Mr Evans’ efforts to bind ANZ to a unilateral contract as based upon an “irrational premise” being “that a person or party can unilaterally impose a contract upon one or more other parties by producing a five page written document, full of gibberish and legal nonsense, sending it to the other party or parties and then asserting that when the recipients ignore the document, they fall to be bound by its terms.”

That case seems to support my understanding that the use of a promissory note must be bilaterally agreed upon.

My advice is you should contact a lawyer near you and hire them to construct a specific promissory note for you to present to your creditors to seek their written acceptance of the note and to clearly determine what the understanding is regarding any impact it might have on their acceptance on the underlying debt.

Frankly, I’d be shocked if they agreed to accept it or accept it in lieu of the underlying debt.

Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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