Loan Agreement: How to Draw It Up, Recover the Money and Not Lose It in Court

You lent money to an acquaintance against a receipt or simply transferred the amount to a card, and now he does not answer calls. Or the other way round: you borrowed from a friend but did not manage to repay on time, and he started threatening court. In both cases, everything depends on how the relationship was documented.

Mistakes at the start cost the most: there is no written agreement, no repayment date is stated, and it is unclear whether the loan is with interest or not. Later the court may not accept the receipt, treat the money as a gift or refuse the claim because the deadline was missed. We will look at which documents are needed, how to draw them up and what to do if the debt is not repaid.

Loan Agreement: When the Relationship Gets Out of Control

A loan under Article 717 of the Civil Code of the Republic of Kazakhstan is considered concluded at the moment the money is transferred, not at the moment the paper is signed, unless the parties have agreed otherwise. If the amount exceeds 100 MCI, the written form is mandatory, otherwise the lender has almost nothing to confirm the transfer. Without an agreement or with vague terms, recovering the money turns into a dispute where one person's word stands against another's.

To ensure a claim for the return of money under a loan agreement rests on documents rather than memory, the text records the amount, the fact and date of transfer, the repayment term and the procedure for paying interest. The most dangerous things are blank fields, wording like "I'll pay it back when I can" and the absence of the borrower's details. Check that the agreement contains:

• the borrower's passport details and address
• the exact amount and currency of the loan
• the date the money was transferred and the repayment term
• a term on interest or its absence
• the borrower's signature on every page

Loan agreement and receipt: how they differ and what to attach

A loan agreement records the terms: who transferred money to whom, how much and for what term. Under Article 716 of the Civil Code of the Republic of Kazakhstan, a borrower's receipt is itself recognised as a proper written form of loan, but it usually contains no terms on remuneration or term. It is better to have both documents.

A transfer to a card is confirmed by a statement: keep it and state "under a loan agreement". For cash, the receipt should show the date, amount and the borrower's signature. Correspondence in messengers confirms the debt.

• Loan agreement — written form, signatures of the parties, amount and repayment term.
• Receipt — under Article 716 of the Civil Code of the Republic of Kazakhstan it is recognised as a written form of loan, but it does not contain terms on remuneration or term.
• Payment order or bank statement — evidence of a non-cash transfer.
• Correspondence — records the request, acknowledgement of the debt or a promise to repay the money.

A complete set of documents improves the chances of proving that money was handed over if the matter goes to court.

Interest-bearing loan agreement: how to set out repayment

For the lender to be able to demand the money, the loan agreement must clearly set out the repayment deadline, the rate of interest for the use of the sum and the penalty for late payment. If no deadline is specified, under Article 722 of the Civil Code of the Republic of Kazakhstan the borrower must repay the debt within thirty days from the day the lender made a demand for repayment. The penalty and interest for the use of the money can be provided for in advance — this will avoid disputes over which sanctions apply in the event of breach.

Pay particular attention to the interest clause: under Article 718 of the Civil Code of the Republic of Kazakhstan, remuneration for the use of a loan is paid in the amount determined by the agreement. The wording "the loan is interest-free" or the absence of a rate means that the lender will no longer be able to recover remuneration for the use of the money. For early repayment, bear in mind Article 722 of the Civil Code of the Republic of Kazakhstan: an interest-free loan may be repaid early freely, while an interest-bearing loan may be repaid early only with the lender's consent or if such a right is expressly set out in the agreement.

• Repayment deadline: a specific date or an event with a period.
• Remuneration for use: rate and accrual period, the annual effective rate on a loan to a citizen — no higher than one hundred per cent.
• Penalty for late payment: under Article 725-1 of the Civil Code of the Republic of Kazakhstan, no higher than 0.5 per cent of the sum for each day.
• Early repayment: the lender's consent or an express term of the agreement.

Loan agreement between individuals: how to avoid a dispute

Loans between relatives and acquaintances are most often made without a written agreement: people take each other at their word and are embarrassed to discuss the terms. When the money is not repaid on time, proving the very fact of the loan becomes difficult — in court one has to confirm not only that the sum was handed over, but also that it was a loan and not a gift or payment under other obligations.

Even if there is a loan agreement or a receipt, mistakes in them hinder recovery: the identity document details and IIN are not stated, the sum is not written out in words, the repayment date is missing, the borrower's signature is absent, or the document is drawn up in such a way that the parties cannot be unambiguously established. Witness testimony does not replace written evidence of a loan — the court assesses it critically, especially where the defendant objects. Typical mistakes worth checking before signing:

• No written form — only correspondence or an oral arrangement.
• The receipt does not state the identity document details, IIN and address of the borrower.
• The sum is stated in figures, without being written out in words.
• The deadline and procedure for repayment of the money are not defined.
• The document is signed not by the borrower but by another person.

Claim for the return of money under a loan agreement: how to make it

The law does not establish a mandatory pre-trial procedure for a loan, but it is still worth sending a written demand for repayment of the debt: if the repayment date is not specified in the agreement, it is from the day of the demand that the thirty days under Article 722 of the Civil Code of the Republic of Kazakhstan begin to run. In the demand itself, it is enough to state clearly who lent, when and how much, by what date the money must be returned and where to transfer it. The demand confirms that you tried to settle the dispute amicably and fixes the date from which the time limits for further recovery begin to run.

Serve the demand in person against the debtor's signature or send it by post with acknowledgement of receipt. Keep a copy with a note of receipt, or the receipt and the inventory of the enclosure. If the loan agreement had a repayment date, wait for it to expire and only then present the demand. Where no date is specified, the demand gives the debtor a reasonable time to repay, after which you can go to court.

• Personal service — ask the debtor to put the date and signature on your copy
• Post — send by registered letter with acknowledgement of receipt and an inventory
• Electronically — only if this method is agreed in the agreement
• Keep proof of sending and service until the trial

Loan agreement breached: court and court enforcement officer

If, after the demand for the return of money, the debtor stays silent or refuses to pay, the dispute is then decided by the court. A claim for recovery of debt under a loan agreement is filed at the debtor's place of residence, and in cases established by law — at the claimant's place of residence. Attach to the application the original agreement and the receipt, the calculation of the debt and interest, proof that the demand was sent and correspondence with the debtor.

After the court's decision, recovery is carried out by private and state court enforcement officers: they trace the debtor's accounts and property, impose attachment, and withhold money from income. This only works with your involvement: tell the enforcement officer the addresses, place of work and banks of the debtor that you know. It is worth remembering that enforcement proceedings can be suspended or terminated, so both the debtor's actions and your response to them matter.

• loan agreement and receipt — originals
• calculation of the amount of debt and interest
• confirmation that the demand was sent
• correspondence and other evidence

Loan agreement and limitation period: do not lose your money

Claims for the repayment of a loan are subject to a limitation period. As a general rule it is three years — and if it is missed, the court will refuse recovery, even where the debt is confirmed by a receipt. The period starts from the moment the creditor learned or should have learned of the violation of the right: usually this is the day following the repayment date specified in the agreement or receipt.

The period may be interrupted if the debtor acknowledges the debt. This happens when they sign a reconciliation statement, pay part of the amount, ask for a deferral or otherwise confirm the obligation to return the money. After the interruption, the period starts running afresh, so such actions should be documented.

Record any acknowledgement of the debt in writing — this extends the possibility of recovery.

The main practical conclusion: a written loan agreement with clear terms on the amount, term and interest is not a formality, but the only way to prove your claims in court and avoid losing money.