With the state of California still in financial crisis, the state controller began issuing IOUs in July 2009 to its creditors, including tax payers waiting on tax refunds and small business owners. While the state promises to eventually pay these IOUs with interest, you do have the ability to sell your IOU in order to get the money in-hand now. However, you will need to be careful not to get cheated. This page will walk you through how to safely sell your California IOU.

With the recession hitting Californians hard, many people cannot afford to wait until October for the state to make good on the IOUs they began issuing in July 2009. While some smaller banks and credit unions continue to cash the IOUs at their face value, several of the largest banks, including Bank of America, Wells Fargo, Chase, Union Bank and CitiBank have decided that they will no longer honor the IOUs, If you are have an IOU that you cannot put off cashing, this page will provide some valuable information on how to sell your California IOU.

An IOU, or registered warrant, issued by the state of California is a promise by the state to pay outstanding debts on or before October 2, 2009.http://latimesblogs.latimes.com/money_co/2009/07/the-staff-of-the-securities-and-exchange-commission-has-issued-guidance-that-registered-warrants-also-known-as-ious-being-i.html Holders of these IOUs will receive the face value of the IOU plus 3.75% interest. The IOU looks like a check, except that it has the words "Registered Warrant" printed in the top corner.http://www.consumerismcommentary.com/2009/07/13/california-ious-buying-selling-and-inherent-value/

There are plenty of people looking to buy your IOU. A variety of websites have been set up to broker deals between buyers and sellers, and there are a number of ads on Craigslist. The key is to find a seller who gives you the value you desire.

1. IOUs are generally being sold for $0.60 to $0.95 on the dollar.http://www.lubbockonline.com/stories/071909/bus_465634882.shtml
2. When negotiating, remember that your buyer will not only get the true face value of your IOU, but also the 3.75% interest that face value it is accruing.
3. The Securities Exchange Commission (SEC) has issued an alert to IOU holders that the IOUs should be considered "securities" and thus subject to the federal laws protecting securities, including anti-fraud rules. As the seller, however, you are tasked with making sure that you think you are getting a fair price for your IOU. Once you sell it, you cannot recover the difference between the selling price and face value price or the interest it has accrued.<ref>http://www.sec.gov/investor/pubs/californiaiou-alert.htm
4. Ask your potential buyer if he/she is registered as a securities dealer, if they are aware of and willing to abide by the SEC statement and what fees might be involved in the transaction.http://latimesblogs.latimes.com/money_co/2009/07/the-staff-of-the-securities-and-exchange-commission-has-issued-guidance-that-registered-warrants-also-known-as-ious-being-i.html

With the tentative budget agreement reached earlier this week, it is hopeful that California will soon be able to stop issuing new IOUs and begin paying on the ones that already exist. Given the state's financial turmoil, however, this may not happen for a long while. For those needing money now, selling your IOU is a feasible option as long as you are careful with the amount you sell it for.