How creditors might respond to a Bill of Exchange or Promissory Note

The first thing I should say is that I don’t know of a single instance in which anyone has been arrested or gone to prison for issuing a properly executed BoE or bond to discharge a debt. But I must also say that, in many cases, “creditors” either pretend or may in fact not know what a BoE or bond is. It is not your job to educate them. Even if the “creditor” knows what the instrument is, they may not like receiving it or even ignore it.

The reason most “creditors” won’t like your instrument is because they have been accustomed to receiving a lot of interest and principal payments on “loans” they made to you when, in reality, they loaned you your own credit. Said another way, they have pretended to “loan” us money, then ask us to pay back the principal with interest when, in fact, they loaned us nothing from their own assets and had no risk. When we use the instrument to discharge the purported debt, we cut off the supply of all the profits that they think they deserve.

If you are going to have any trouble with “creditors” accepting your instrument, the first and most important issue you must resolve in your own mind is “Did my instrument really discharge the debt?” When you can answer this in the affirmative, then you will have taken a major step. I would also suggest that the answer should be “yes”. Let’s use an example to illustrate this point.

Let’s say you owed someone $100 and that you sent them a $100 FRN to discharge the debt. Let’s also say that you had a certificate of service and a return receipt so you know they received your “money” but then they acted as if the debt was still owed. In this case, was the debt discharged? Of course, the answer is yes! The only question remaining in your mind should be, “Are these instruments valid?” You should not use these kinds of instruments until you are comfortable that they are valid.

Many “creditors” will pretend they didn’t receive the instrument, will not process it or will act dishonorably. These “creditors” will do all kinds of things to get you to “pay” again or re-contract with them. They may say, “we only accept U.S. funds or U.S. currency”. You must be resolute in your own mind that the debt has already been paid. Every attempt on the “creditor’s” part to get you to “pay” again is the action of a third-party trying to extract more credit from you. I say they are third parties because the original contract or debt has already been satisfied and is no longer parties to the contract with you because the contract has been fulfilled. If a complete stranger came up to you demanding money and you knew that you had never entered a contract with them, you would know that they had no legitimate claim against you. You will have to treat the “creditors” in the same way when they want you to “pay” after you have given them a valid instrument.

At this stage in the use of these instruments, it is hard to predict exactly how every “creditor” will respond. You need to be prepared for the possibility that they will act as if you never “paid” them. If you are discharging credit card debt, they may close or cancel the account, turn your account over to a collection agency, and put negative information on your credit report. This does not mean that your instrument was invalid, illegal or fraudulent. It just means the “creditor” doesn’t like it.

How To Deal With Uncooperative Creditors

If the creditor doesn’t like your instrument, it is quite possible that the “creditor” will continue to send you presentments that reflect that the instrument was never posted to your account. This is a matter of ongoing research and for one or more additional essays. But we can give you some ideas about how you might respond.

First, you must respond to each and every presentment you receive. If you are convinced that your instrument was good, then the debt has been discharged. This means that every communication from the “creditor” is an attempt to re-contract with you. If you don’t respond, you are, by your silence, agreeing that you still owe a debt. There is a basic principle of commerce that says if you argue with them or you are silent (don’t respond to a presentment) then you are in dishonor. If you are in dishonor, then you are automatically the loser in the dispute. If the dispute goes to court, arbitration or some other administrative process, you will lose. So, whatever you do, you must remain in honor.