How to Use a Bonded Promissory Note

By eHow Legal Editor

There are a couple of ways you can cash in or use a bonded promissory note as payment. Determine what method works best for your purposes before you attempt to use a promissory note.

Full Redemption

Take your promissory note to your financial institution and deposit it in your account, just as you would a personal check or your paycheck.

Ask your bank when the amount of the promissory note will be listed as available funds in your account. Each banking institution has a different policy.

Leave the money in your account even after it's listed as available until you receive your monthly statement showing that the promissory note was honored by the financial institution it was drawn from.

Consider presenting the promissory note directly to the financial institution it was drawn from for immediate payment. This way, you'll know immediately whether the promissory note will be honored, or find out right away if the promissory note is not a binding financial contract.

Partial Redemption

Investigate companies that offer to purchase your rights to a structured settlement in return for a lump sum payment. You'll find many that will do the same thing for a promissory note that specifies partial payments over a period of time.

Read all the information the company provides before you sign any paperwork. Discover exactly how much money the lump sum will be and how much income tax you're obligated to pay before you sign anything.

Decide whether it's worth trading your payments for a smaller lump sum of money you receive immediately. Crunch the numbers to find out exactly how much money you lose by opting for the convenience of an immediate payment.

Sign the paperwork that transfers the right of the promissory note over to the company who will give you the cash. Don't be surprised at the amount of documentation needed to transfer the promissory note from you to the company.