A creditor stuck holding a promissory note with only a signature loan will get nothing if the debtor is insolvent.

Question

Quizplus · Accepted Answer

A promissory note is a legal instrument in which one party (the maker) promises to repay a specific amount of money to another party (the payee), usually with interest, on a stated date or on demand. In a signature loan, the only collateral is the borrower's signature, which means there is no tangible asset that can be seized by the creditor in case of default. Therefore, if the debtor becomes insolvent and cannot repay the loan, the creditor holding the promissory note with only a signature loan will not be able to recover any money or assets.

A Creditor Stuck Holding a Promissory Note with Only a Signature