Is it true that a company that refuses to accept a payment towards a debt, in part or whole, thereby releases interest in said debt?
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Is it true that a company that refuses to accept a payment towards a debt, in part or whole, thereby releases interest in said debt?
We are in the process of filing for a Chapter 7 and have a vehicle which has 2 monthly payments due. We have tried to pay said company 1 monthly payment both over the phone and on line on multiple occasions, and have been told that they will not accept anything but the total amount due by a specific date or they will repossess. This is not possible for us and we want to re-affirm the vehicle but we have been advised that they cannot do this. The vehicle is not 90 days late, nor or they willing to accept a payment, therefore they have surrendered their interest. Is this accurate?
Asked on May 18, 2012 under Bankruptcy Law, Missouri
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
No, unfortunately, it is not accurate. Once you are in default on a debt, a creditor is entitled to insist in payment in full of all amounts you owe. They are not obligated, once you default, to accept a partial payment or a payment schedule, and their refusal to accept anything short of full payment--while arguably short-sighted and bad business--does not cause them to waive their right to collect the debt or result in any release of the debt.
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