Can I sue someone for not paying back an IOU?
Yes. An IOU is one of the strongest types of loan evidence. A signed IOU is written proof of the debt: amount, parties, often the date and any terms. Most state laws treat IOUs as enforceable contracts (also called 'promissory notes'). The case is usually straightforward at the hearing because the borrower's own writing establishes the debt. Filing deadlines are longer for written IOUs (4 to 6 years in most states, sometimes 10).
What makes an IOU enforceable?
Four elements. Most signed IOUs include enough to enforce.
Amount
The dollar amount owed. Even handwritten IOUs are enforceable if the amount is clear. Disputes about the amount can be resolved with bank records or witness testimony.
Parties (lender and borrower)
Both parties named. The borrower's signature is the central evidence. Lender's name is helpful but recovery is possible without it.
Repayment terms (or default 'on demand')
If the IOU specifies a date or schedule, that controls. If silent, the loan is 'on demand' — meaning payable whenever the lender asks. Sending a demand letter triggers the obligation.
Interest (if specified)
If the IOU lists an interest rate, you can charge it — up to your state's legal limit (states cap how much interest is allowed). Without a specified rate, you can claim the state's default rate (typically 7 to 10%).
How much can you claim?
IOU amount plus pre-judgment interest plus filing fees.
IOU principal
The amount stated in the IOU. The signed document is decisive evidence at the hearing.
Pre-judgment interest
Specified in the IOU or state legal rate (7 to 10 percent per year typical). Running from the agreed repayment date or first demand.
Filing fees, post-judgment interest
Filing fee, service-of-process cost, post-judgment interest accruing until paid.
$4,000 IOU plus 3 years of pre-judgment interest at 10 percent, plus filing fee.
Send a demand letter first.
Demand letters with the IOU attached produce settlement in most cases. The borrower knows the IOU is decisive evidence and has limited defenses.
- Copy of the signed IOU
- Date of the IOU and any agreed repayment date
- Any prior demands or partial payments
- Pre-judgment interest calculation
- A 14-day deadline before you file
- Sent certified mail with copy of IOU attached
On June 14, 2023, you signed an IOU for $4,000 (copy attached). The IOU specified repayment within 12 months. Three years and four months have passed without any payment. The IOU is enforceable as a written promissory note.
I demand within fourteen (14) days:
- Payment of $4,000 in IOU principal;
- Pre-judgment interest at 10 percent per year for 3 years ($1,200).
Total demand: $5,200.00. If unresolved, I will file in Small Claims Court.
How to file an IOU case.
Four steps. The signed IOU is the case.
Locate the original IOU
Original signed document is best. A clear copy works in most courts. If the original is lost, look for any photograph, scan, or secondary record (bank statement reflecting deposit of the loan).
Send certified-mail demand
Attach a copy of the IOU. Certified-mail receipt creates the formal record.
File in small claims
If demand fails, file. Filing fees usually run $30 to $100. Bring the original IOU to the hearing.
Hearing
Lead with the IOU. The borrower's signature on the document is decisive. Hearings usually run 10 to 15 minutes.
Collecting on an IOU judgment.
Money judgments enforce via judgment lien, bank levy, and writ of execution. Wage garnishment is also available. Post-judgment interest accrues until paid. IOU judgments stay valid 10 to 20 years.
What evidence do you need to sue on an IOU?
The IOU itself is the case. Other evidence is supporting.
I, Jordan Borrower, owe Reese Lender the sum of $4,000.
I promise to repay this amount in full within twelve (12) months from this date.
Interest at 10% per annum if not paid by due date.
Written contract · 6-year statute
An action for breach of any written contract for the payment of money shall be commenced and prosecuted within six years after the cause of action accrues.
IOU due June 2024. 6-year statute runs June 2030. Within deadline.
Common borrower defenses, with rebuttals.
Three arguments cover most IOU cases. Few succeed.
Keep it simple. Organized records, clear timelines, and solid evidence are your best defense.
How much do lenders actually recover?
IOU cases produce predictable, full recoveries with strong documentation.
Partial recovery. Court awards portion when IOU is unclear or partial payment is documented.
Full IOU + interest. Most common with clear signed IOU.
Cap-of-court awards. Larger IOUs with full principal, interest, and (with attorney-fee clauses) recovery of fees.
Better evidence. Better prep. Better outcome. Your documentation makes the difference.
What are the alternatives to small claims?
IOU cases have strong demand-letter outcomes. Court is the backup.
Demand letter with IOU attached
Free, very effectiveWhen it fits: any signed IOU. The borrower knows the IOU is decisive evidence. Most pay within 14 days.
Tradeoff: no enforcement if borrower ignores.
Mediation
Preserve relationshipsWhen it fits: you want to recover but maintain the relationship. Mediation can negotiate payment plans.
Tradeoff: no enforcement; only effective if borrower participates.
Small claims (this guide)
Reliable enforced recoveryWhen it fits: demand letter ignored. Damages within your state's cap.
Tradeoff: 30 to 90 day timeline. Strong cases at the hearing.
Enforce the IOU.
Demand letters with the IOU attached produce settlement in most cases. Our generator builds yours in under two minutes.
Illustrative. Larger IOUs push to small-claims cap.
Frequently asked.
The questions lenders actually ask before filing. Email support if yours isn’t here.
Is a handwritten IOU enforceable?
Yes. Most state laws enforce handwritten IOUs as written contracts. The signature plus the dollar amount plus the parties named are usually enough. Even an IOU on a napkin counts if the elements are present.
What if the IOU doesn't specify a repayment date?
Without a specified date, the loan is 'on demand': payable when the lender asks. The demand letter triggers the legal obligation. Statute of limitations starts running on the demand date, not the IOU date.
What about an electronic IOU (text or email)?
Most states recognize electronic signatures and writings as enforceable contracts. A text or email saying 'I owe you $4,000, will pay back by June' from the borrower is essentially an electronic IOU. UCC and state e-sign laws enforce these.
Should I include interest in the IOU?
Yes, especially for loans over a year. Interest specified in the IOU is enforceable up to state usury limits. Without specified interest, you can claim the state pre-judgment rate (7 to 10 percent typical), but specifying in advance is cleaner.
What if the borrower disputes my signature on the IOU?
The borrower's signature is what matters; yours is rarely disputed. If the borrower challenges authenticity, the court can compare to known signatures. Bank deposits and follow-up texts also corroborate.
How long do I have to sue on an IOU?
Written contracts: 4 to 6 years in most states (some up to 10). The IOU is a written contract. Statute starts on the agreed repayment date or first demand. Move within the deadline.
Can I charge interest above what's in the IOU?
No. The IOU controls. If the IOU is silent on interest, you can claim pre-judgment interest at the state legal rate but not contractual interest higher than what was agreed. State usury limits also cap contractual interest.