How to accelerate payments due under a promissory note?

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How to accelerate payments due under a promissory note?

I am holding a promissary note on a loan. The contract states that payments are to be made 1st day of every month. It goes on to say that if the payment is not made when due, the unpaid balace of the entire loan amount shall mature and become immediately payable. The last few payments were made approximately 4-6 days after the 1st of the month. Do I have a right to pursue this legally and get immediate payment of the entire loan?

Asked on September 10, 2012 under Bankruptcy Law, Wisconsin

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If you wish to accelerate the balance of the promissory note that you hold where the borrower has been consistently late on making the monthly payments when due, then you send the borrower a written note, certfied mail, return receipt requested memorializing the past several month's late payments, the acceleration clause under the note and that one future late payment will result in the note's balance being accelerated.

Keep a copy of such for future use and need. Assuming a future payment is late, you then send the borrower a letter stating the balance on the note is due and payable immediately. If not paid as demanded, then you bring suit for the full note.

Personally, if payments are being made monthly, albeit late, trying to accelerate the note is probably more time and effort than what it is worth.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

From what you write, you seem to have the ability to accelerate the payments and take legal action to recover the entire outstanding amount: a promissory note is, in this way, essentially a contract, and like any other contract, the parties are bound by its terms and have whatever rights and remedies it gives to them. If the terms of the note allow acceleration under this circumstance, you may accelerate.

 


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