Delaware Unsecured Promissory Note Overview
An unsecured promissory note in Delaware is a loan agreement where the borrower promises to repay without pledging any collateral. The lender relies on the borrower's creditworthiness and the legally enforceable promise to pay. The maximum interest rate in Delaware is No cap (5% over Fed rate for unlicensed).
5% above Federal Reserve discount rate for unlicensed lenders; no cap for licensed lenders. Unsecured notes carry more risk for the lender, so interest rates are typically higher than secured notes. However, the rate must still comply with Delaware's usury laws.
If the borrower defaults, the lender's primary remedy is filing a lawsuit within Delaware's statute of limitations (3 years (oral and written)). The small claims court limit in Delaware is $25,000, which is ideal for smaller unsecured loans.
No cap (5% over Fed rate for unlicensed)
Usury rate cap
3 years
Statute of limitations
$25,000
Small claims limit
25%
Max garnishment
Delaware Legal Requirements
Delaware has specific requirements for unsecured promissory notes:
Important: Delaware Usury Laws
Delaware's maximum interest rate is No cap (5% over Fed rate for unlicensed). 5% above Federal Reserve discount rate for unlicensed lenders; no cap for licensed lenders. Exceeding this limit may void the interest or result in penalties.
- Written Agreement: Must be in writing, signed by borrower, clearly stating loan terms
- Compliant Interest Rate: Must not exceed Delaware's No cap (5% over Fed rate for unlicensed) usury cap
- No Collateral Statement: Explicitly state that the note is unsecured with no collateral pledged
- Default Provisions: Events of default, cure period, acceleration clause, and collection remedies
- Personal Guarantee: Recommended for business borrowers to protect the lender
- Governing Law: Specify Delaware law as the governing jurisdiction
Collection Remedies in Delaware
If a borrower defaults on an unsecured promissory note in Delaware, the lender has several collection options:
Send a Formal Demand Letter
Written notice demanding payment within a specified timeframe, creating a paper trail
File in Small Claims Court ($25,000 limit)
Fast, affordable, no attorney required for amounts within the limit
File a Civil Lawsuit
For amounts above small claims limits, file in Delaware civil court
Enforce the Judgment
Up to 15% of disposable earnings. Bank account levies and property liens also available
Statute of Limitations in Delaware
The statute of limitations for collecting on a promissory note in Delaware is 3 years (oral and written). After this period, the lender loses the right to file a lawsuit to enforce the note.
| Aspect | Delaware Rule |
|---|---|
| Usury Rate | No cap (5% over Fed rate for unlicensed) |
| Statute of Limitations | 3 years (oral and written) |
| Small Claims Limit | $25,000 |
| Garnishment Rules | Up to 15% of disposable earnings |
Sample Delaware Unsecured Promissory Note
Below is a preview of our Delaware-specific unsecured promissory note template.
STATE OF DELAWARE
UNSECURED PROMISSORY NOTE
No Collateral Loan Agreement
LENDER:
Name: [Lender Name]
Address: [Delaware Address]
BORROWER:
Name: [Borrower Name]
Address: [Delaware Address]
LOAN TERMS
Principal: $[Amount]
Interest: [Rate]% per annum (max No cap (5% over Fed rate for unlicensed) in DE)
This note is UNSECURED. No collateral has been pledged.
Delaware Unsecured Promissory Note FAQ
Answers to common questions about unsecured promissory notes and collection procedures in Delaware.
Official Delaware Resources
Use these official resources for Delaware lending laws and court procedures.
Other Delaware Promissory Note Types
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