It is generally understood that a debtor is more likely to pay a promissory note than he is to keep a simple verbal promise. It will injure his credit if he allows his paper to go to protest. It is difficult, too, to dispute a claim after a note has been given in settlement. The note may also be used by the creditor in raising money for his own use; that is, he may get it discounted - sell it to a note broker or to a bank.

But there are some disadvantages. If a note is accepted from a debtor the account cannot be collected until the day of maturity of the note. You may hold a note against a debtor, and if your note is not due, you cannot by any process of law prevent your debtor from selling everything he owns and leaving for parts unknown.

A note that is overdue is in some particulars better than a note not yet matured. An overdue note draws interest at the legal rate from the date of maturity and legal steps to collect it may be taken at any moment.

Discounting Paper. To discount a note or draft is to sell it at a discount. The rates of discount vary according to the security offered, or the character of the loan, or the state of the money market. For ordinary commercial paper the rates run from 4 to 8 per cent. Notes received and given by commercial houses are not usually for a longer period than four months.