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What is a Letter Accepting Payment in Instalments?
A Letter Accepting Payments in Instalments is a document used by a creditor (ie someone who is owed money by another party) to accept their debtor’s (ie the party owing the money) request to repay the debt in instalments. Letters Accepting Payments in Instalments are formal legal agreements that form the basis of debt repayment plans.
When should I use a Letter Accepting Payments in Instalments?
Use this Letter Accepting Payments in Instalments:
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if you are a creditor and are owed money by a debtor
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when you have received an offer to pay off a debt by instalments of a regular, fixed amount
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to agree to the proposal to repay the debt in regular, fixed instalments
Sample Letter Accepting Payment in Instalments
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Re:
We acknowledge receipt of your letter dated about your proposal to pay the by instalments (Letter).
We accept your proposal to make payments
The instalments are to be made into the following bank account:
Acc no. , sort code and account name .
Please use as your reference when making payments.
The full balance of the will become payable immediately should you be late in making payment. reserve the right to take any action to recover any outstanding amounts, including court action.
Please counter-sign below to confirm your agreement to this letter.
Yours
acknowledge receipt of this letter dated and agree to accept all of its terms in relation to the repayment of the outstanding debt.
| Signed the debtor: | |
| Name: | |
| Dated: |
About Letters Accepting Payments in Instalments
Learn more about making your Letter Accepting Payments in Instalments
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How to make a Letter Accepting Payments in Instalments
Making a Letter Accepting Payments in Instalments online is simple. Just answer a few questions and Rocket Lawyer will build your document for you. When you have all of the details prepared in advance, making your document is a quick and easy process.
To make your Letter Accepting Payments in Instalments you will need the following information:
Party details
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What are the creditor’s details (ie legal structure and address)?
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If the creditor is a partnership, LLP or company, who will sign the Letter on the creditor’s behalf?
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Will the Letter be printed on headed paper including the business name and address?
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If not, what is the creditor’s address?
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What are the debtor’s details (eg legal structure, name and address)?
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If the debtor is a partnership, LLP or company, who will sign the Letter on the debtor’s behalf?
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Letters
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On what date will this Letter be sent?
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What is the date of the letter to which this Letter Accepting Payments in Instalments is responding?
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Who is this Letter being addressed to and what are their details?
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What is the salutation?
Repayment
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Is the debt related to invoices? For example, if the debtor is a customer who has not paid your invoices.
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If so, what are the numbers of the outstanding invoices?
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Do you want to:
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Accept the debtor's repayment plan?
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Propose amendments to the repayment plan? If so, what are the details of the proposed repayment plan?
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What are the payment details?
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Does the creditor agree to freeze interest on the outstanding amount?
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If not, what is the annual interest rate?
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Common terms in a Letter Accepting Payments in Instalments
A Letter Accepting Payments in Instalments should be used to agree to a debt repayment plan with a debtor. As a result, this Letter Accepting Payments in Instalments template covers:
Sender and recipient details
The start of the Letter Accepting Payments in Instalments sets out the details (ie names and addresses) of the recipient (ie the debtor) and the sender (ie the creditor).
The Letter itself
The body of the Letter Accepting Payments in Instalments sets out that the creditor accepts the debtor’s repayment plan (either fully or subject to certain changes). It provides details of the bank account the instalments should be paid into and what reference to use. The Letter also sets out in what circumstances the debt will become immediately payable (together with any applicable interest).
Signatures
The creditor should sign the Letter in the space provided before sending it to the debtor. If the debtor agrees to the repayment plan set out in the Letter Accepting Payments in Instalments, they should countersign the Letter in the space provided. This makes the Letter a binding agreement between the parties.
If you want your Letter Accepting Payments in Instalments to include further or more detailed provisions, you can edit your document. However, if you do this, you may want a lawyer to review or change the Letter Accepting Payments in Instalments for you, to make sure it complies with all relevant laws and meets your specific needs. Ask a lawyer for assistance.
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Legal tips for making a Letter Accepting Payments in Instalments
Make sure that a Letter Accepting Payments in Instalments is suitable
You should use a Letter Accepting Payments in Instalments when you agree to the repayment plan proposed by your debtor. This will generally be the case if you have received the debtor’s Letter proposing payments in instalments and believe that the debtor can make payments under the plan. If you don’t think the debtor will be able to follow the repayment plan, you should consider alternatives to accepting the proposal to make payments in instalments.
For more information, see the FAQ ‘What are the alternatives to accepting payment in instalments?’.
Consider when you have to start a debt recovery process
Arranging a repayment plan is one of the first steps to reducing a debt. However, depending on the debt and its repayment, you may have to take further steps to recover the money you are owed. This may involve sending a Debt recovery letter (a formal payment reminder) and Second debt recovery letter (a second payment reminder) and a Letter before action (a letter sent before beginning legal proceedings for the recovery of a commercial debt). Recovering the money owed may also involve engaging a debt collection agency, engaging in alternatives to legal action (like mediation) and/or making a court claim in England and Wales or Scotland.
Consider following our Debt recovery checklist to help you with this process.
Understand when to seek advice from a lawyer
Ask a lawyer for:
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information about debt recovery
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advice on your legal rights under a contract
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advice when a debtor does not agree that they owe all or some of the debt
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advice on the immediate recovery of an entire debt
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advice on a payment period that is too long or instalments that are too small
This Letter Accepting Payments in Instalments is governed by the law of England and Wales or of Scotland.
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Letter Accepting Payment in Instalments FAQs
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What is included in a Letter Accepting Payments in Instalments?
This Letter Accepting Payments in Instalments template:
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enables a debtor's offer to pay off a debt by instalments of a regular fixed amount to be accepted
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fixes the repayment of the debt over time
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is a formal legal agreement when signed by both the creditor and the debtor
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Why do I need a Letter Accepting Payments in Instalments?
A Letter Accepting Payments in Instalments can help you avoid any potential conflicts by setting out clear rules for the repayment of a debt with a debtor. By accepting a debtor’s offer to repay debt in instalments, you give the debtor a chance to pay you the money owed on a basis that works for them. For more information, read Repayment agreements and How to avoid problems with debtors.
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Why should I consider accepting payment in instalments?
You should use this Letter Accepting Payments in Instalments if you have received such a request to pay a debt in instalments.
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What's the advantage of accepting a proposal to pay in instalments?
If a debtor cannot make immediate payment of a whole debt, they may offer to pay off the debt in regular fixed instalments to avoid facing legal action. They can do this using a Letter proposing payment in instalments.
Accepting such a request and entering into a repayment agreement using a Letter Accepting Payments in Instalments 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. For more information, How to avoid problems with debtors.
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Is a Letter Accepting Payments in Instalments legally binding?
Once signed by both the creditor and the debtor, this Letter Accepting Payments in Instalments becomes a formal legal agreement. This means that it becomes a legally binding and enforceable contract. If the debtor fails to repay the debt in accordance with this payment plan, you can take legal action against the them.
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Should I consider the debtor’s previous credit history?
The debtor 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.
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Should I freeze interest?
A debtor may ask you to freeze interest charges 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 Letter. If you refuse, the Letter Accepting Payments in Instalments may be subject to further negotiations before it is accepted by both parties.
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What are the alternatives to accepting payment in instalments?
Instead of using a Letter Accepting Payments in Instalments, you can decide to enter into a Loan agreement or use a Promissory note. These create a more formal contract between the creditor and the debtor. Read Loan agreements and promissory notes for more information on these types of agreements.
For more information on arranging repayment plans, read Repayment agreements.
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