If you've received an offer by a debtor to pay off their debt by a regular fixed amount use this letter accepting payment in instalments to create a formal legal agreement for the repayment of this debt. This instalment payment agreement will help avoid any potential conflict by setting out clear rules for the repayment of the debt with the debtor. This letter accepting payment in instalments will outline the fixed amount as well as the time in which it is to be repaid.
Overview of the Letter accepting payments in instalments
When should I use a letter accepting payments in instalments?
Use this letter accepting payment in instalments:
- when you have received an offer to pay off a debt by a regular fixed amount
What's included in a letter accepting payments in instalments?
This letter accepting payments in instalments:
- enables a debtor's offer to pay off a debt by a regular fixed amount, to be accepted
- fixes the repayment of the debt over time
- when signed by both the creditor and the debtor is a formal legal agreement
What's a letter accepting payments in instalments?
A letter accepting payment in instalments creates a formal legal agreement for the repayment of debt.
Do I need a letter accepting payment in instalments?
An instalment payment agreement will help to avoid any potential conflict by setting out clear rules for the repayment of the debt with the debtor.
Why should I consider accepting payment in instalments?
If one of your clients cannot make immediate payment of a whole debt, they may offer to pay off the debt by regular fixed instalments to avoid facing legal action. They can do this using a letter proposing payment in instalments.
What's the advantage of accepting a proposal to pay in instalments?
Entering a repayment agreement means that you can receive the money owed to you without having to take legal action. It can also be beneficial in maintaining a good business relationship with your client, especially if they are a loyal customer.
Is this a formal legal agreement?
Once signed by both the creditor and the debtor, a letter accepting payment in instalments becomes a formal legal agreement.
Should I consider the client's previous credit history?
Your client who is requesting payment in instalments may ask you to consider their credit history if they have generally been good at paying on time. It may also be beneficial to your business to consider their credit history in determining whether you can see them repaying the debt. You can respond to this request in an acceptance letter, taking it into account if you see fit.
Should I freeze interest?
Your client may ask you to freeze interest and any ancillary charges on an outstanding amount in their request to pay in instalments. This is something you can choose to do in your acceptance letter. If you refuse, the repayment agreement may be subject to further negotiations before it is accepted by both parties.
What are the alternatives to accepting payment in instalments?
You can decide to enter into a loan agreement or use a promissory note. Read Loan agreements and promissory notes for more information.
Further advice
Ask a lawyer for:
- information about debt recovery
- your legal rights under a contract
- a debtor that does not agree to owing the debt
- immediate recovery of the entire debt
- a payment period that is too long or debts that are too small
This letter accepting payment in instalments is governed by the law of England and Wales.