How To Write A Legal Document For Money Paid

Updated March 12, 2022

A payment agreement (or repayment agreement) outlines an installment program to repay an outstanding rest that is made over a specified fourth dimension frame. This is common when an amount is too much to pay for a debtor in a unmarried payment.

Recurring ACH Authorization – Ofttimes required as part of a payment understanding to automatically deduct money from a debtor'southward account.

By Type (12)

Automobile / Vehicle
Debt
Dental
Subcontract Animal
Legal Services
Medical (Patient)
Monthly (Recurring)
Past Due Rent
Photography
Retail Store
School (Tuition)
Veterinary

What is a Payment Plan?

A payment program is a way for someone to pay for something over a specified length of time. This is often when an amount that is unaffordable to an individual is owed and the creditor allows payment over the course of months or years.

Interest Rate

Under almost payment plans, there is no or little interest as long as payments are fabricated on fourth dimension. This is a common incentive for the debtor to not default on their payment schedule.

If there is a traditional interest rate, it cannot be more than than the State Usury Rate.

How to Setup a Payment Plan

Setting upwardly a payment programme requires the consent of a creditor and debtor and to define the terms and conditions in an agreement. For outstanding balances, a payment programme is frequently the "last chance" for the debtor to articulate a debt.

Pace 1 – Concur to Terms

The debtor and creditor must come to terms with a payment arrangement that benefits both parties. There are two (2) types of payment plans:

Goods or Services – A payment program created for a client seeking to buy goods or services with payments fabricated over a curt term (6-18 months). An involvement rate is commonly charged.
- Examples: Motor Vehicle, Cell Telephone, etc.
Outstanding Remainder – Used to consolidate or make an agreement with a creditor where funds are owed. If there is interest accumulating on the balance, it's advised the debtor pay twenty% of their income. When agreeing to terms the creditor may request the debtor'south concluding 2 (2) years of IRS income returns and a re-create of their final paycheck.
- Examples: By debt, Collections, etc.

Step 2 – Create a Payment Agreement

After agreeing to the residue owed, the terms of the payment plan should be written in a simple agreement. There is frequently no security pledged with the incentive to pay by the debtor is either interest-costless payments or a discounted total residue.

The payment agreement should include:

Creditor's Proper name and Address;
Debtor'south Name and Accost;
Acknowledgment of the Balance Owed;
Corporeality Owed;
Interest Rate (if any);
Repayment Period;
Payment Instructions;
Late Payment (if whatever); and
the State of Governing Police force.

After the signature of the creditor and debtor, the understanding becomes legally valid.

For payment plans consisting of more than $x,000, it's recommended for both parties to attach a Notary Acknowledgment to the agreement and sign in the presence of a Notary Public.

Pace iii – Begin the Payment Schedule

Utilise a Credit Card/ACH Authorization Class to obtain the debtor's payment details. Most creditors will require the debtor to set automatic payments that will either accuse the debtor'due south credit card or bank account for each installment period.

Step 4 – Release the Debtor

After the balance owed has been paid-in-full, the debtor will exist released from any financial liability. This can be completed through a Release Course and may also exist used by the debtor to clear any outstanding balances on their credit report.