Hard to recover debt that is not recorded in writing

If a deal involving a large sum of money is not worth your time and effort to record the details in writing, you are probably better off steering clear of the whole thing.

- Tan Ooi Boon

This simple rule of thumb seems obvious but many people have lost fortunes large and small because they would rather believe the bare words they are told than get everything down on paper.

The ugly truth is that even if the deal works out as planned, you are probably not going to get any money if the other party simply denies the arrangement ever existed.

Here are three important points that can protect your hard-earned money.

PROOF IS PARAMOUNT FOR LOANS

If you sue someone to recover money owed to you, you bear the burden of proving that the debt existed in the first place.

In one case, a businessman claimed that he had extended loans of $4 million to a company in return for lucrative interest in the deal, but he did not count on the firm reneging on the deal and saying that the money was not a loan but a repayment to clear an old debt.