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?

UPDATED: May 18, 2012

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

UPDATED: May 18, 2012Fact Checked

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

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


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 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.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption