Expert: Apex Credit Services, LLC - 11/20/2008

Question
I have heard that if you send in a partial payment on a mortgage or car loan and the creditor accepts it, you can then in perpetuity only send in partial payments with no negative consequences and the creditor has to keep accepting same. If the creditor does not accept the partial payment they are, in effect, saying that there is no debt and you can then petition to have the debt eradicated. This seems like a terrible "catch 22" for creditors if true. Can you enlighten me as to the laws regarding partial payments?
Thanks,
Roberta J. Markevitch

Answer
Roberta:

You're referencing the doctrine of accord and satisfaction and it does not work in the way you describe.  Most creditors have clauses within their promissory notes which negate this principle.  However, some states do still recognize it.  I do not know if Georgia does or not and accordingly, you'd need to check the caselaw in GA.

However, accord and satisfaction is where one makes a partial payment that is intended to serve as the full amount.  It doesn't work in installments rather, it must be a lump sum.  The accord is the payment along with a communication which is conspicious that the amount is intended as full payment and the satisfaction is the action of the creditor negotiating the payment.

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