If I’m holding a promissory note with a 10 year balloon payment due next month, what do I do if the debtor only pays the normal amount?

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If I’m holding a promissory note with a 10 year balloon payment due next month, what do I do if the debtor only pays the normal amount?

They debtor have paid monthly on-time for the past 10 years. I do not know if they intend to pay the balloon or if they are even aware it is due. If they send me a normal payment when they are supposed to send the balance, does that mean that I accept the continuation of the monthly payments if I cash the check?

Asked on December 8, 2014 under Business Law, Utah

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

No, accepting partial payment (e.g. the previous normal amount without the balloon portion) does not constitute waiver of your right to the full (e.g. with balloon) payment; a creditor is allowed to accept any amount less than the full amount due while seeking the rest of the money. It would probably be a good idea to send your debtor a reminder about the balloon payment; if they still don't pay, you can try to work it out with them (e.g., maybe they'll pay if given a payment plan or schedule) or could file a lawsuit against them for breach of contract (since a promissory note is also a contract).


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