How do I protect myself from a real estate payoff situation?
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How do I protect myself from a real estate payoff situation?
I’m selling a townhouse and I owe several creditors whom I want to payoff and be debt free. I have to divide real estate profits between them but want them to consider the amount
Asked on October 15, 2016 under Bankruptcy Law, Colorado
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
It is only considered paid in full if the creditors agree to accept it as payment in full. Otherwise, if you make a partical payment to a creditor, they are entitled to take it, apply it against the balance you owe, and still come after you for the rest. So it is imperative that you get their agreement to accept what you give them as payment in full in writing.
Of course, their agreement is voluntary: you can't force them to aggree to accept less than full payment as payment in full. But you have leverage: smart creditors will typically agree to accept less than full payment as payment in full as an alternative to possibly getting nothing at all, since if they don't agree to your terms, you won't give them anything; and while they could sue you for the money, there is no guaranty that they will recover anything if the money is, in the meantime, paid to other creditors. So it is likely in their interest to agree.
(Note: you don't need the agreement of anyone whom you can and do pay in full: payment in full is payment in full.)
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