Re: Laws concerning promisorry notes...

It's not theft unless you engaged in fraud (theft by deception). If you intended to pay it back, you are not criminally liable (of course, that does not mean that charges won't be brought, although one would hope that the prosecutor would not bring such charges without evidence of fraud). You owe it, though, and you can be sued in civil court. If you owe money that you can't pay, you may want to consider filing for bankruptcy if you can't work something out with the creditor.

Re: Laws concerning promisorry notes...

The first question I would ask is whether the business was incorporated or your personal liability was otherwise limited. The next question is whether you signed as an officer of the business or whether you signed as a personal guarantor. The responses to these questions will dictate whether you have any liability and how best to approach the situation.

Of course, if you did sign the note in your individual capacity (as opposed to as an officer of an incorporated business), you are responsible to repay the note. There is nothing to stop your neighbor from using every legal means necessary to recover his money. In other words, he has not obligation to negotiate new terms with you and can file a civil suit against you. He must obtain judgment in his favor before he can collect any money from you that you do not volunteer to pay. Whether a civil suit is filed depends solely on him.

A criminal action, however, is different. A prosecutor makes the determination whether to bring that case. As a practical matter, prosecutors are very busy and usually only bring criminal charges when they are sure that they will be able to obtain a conviction. Based on the information you provided, it seems unlikely that a prosecutor will actually allow the charges to be brought. However, that determination will depend on what information the prosecutor actually receives.

These are complex issues which are difficult to respond to as thoroughly as I would like because I don't know all of the facts. If you would like to discuss the matter more thoroughly, feel free to give me a call.