Legal Question in Credit and Debt Law in North Carolina

Intent to pay payments

My husband and I have 3 outstanding personal loans, and due to a change in job status aren't able to make a full payment on each of these loans this month, AND make our utility bills, house payment and food/gas expenses.

We have tried to work with these loan companies, and have explained the situation in an attempt on our part to work with them, but they are refusing to accept a partial payment and are threatening ''further actions'' such as seizure of property etc.

Is there a law or any legal precedance that will protect us us from these ''further actions'' if we make the ''good faith payment'' as our intent to pay the debt to these creditors since this is all we can do this month??

We do fully intend to satisfy the debt we owe, but aren't able to keep up our regular payments until we have gotten back to having our usual salaries coming in. This will happen within the next month, so bankruptsy is not something that we need to pursue, but just need additional time to get back on track.


Asked on 4/26/06, 5:28 am

1 Answer from Attorneys

Lynn Coleman Attorney-Mediator

Re: Intent to pay payments

The remedies your lender can take for one missed/late payment depend upon what's in the loan contract. When you say they are "refusing to accept a partial payment", they most likely mean that they won't waive their right to add late fees and/or change the interest rate of your loans if you do not pay the full amount due on time. Your credit report will reflect that you did not make the payment on time during the months you have not made a full payment. Making a partial payment will reduce the amount that is "past due", but it still means the loans are past due until you get caught up.

If you are certain this is only a temporary situation, ask your lender how long you have to get the loans current before they send your account to collections. A collection is a much more negative thing to have on your record than a "slow pay" situation.

If there is a potential for this to happen again in the future, and it sounds like it's a possibility, I'd suggest you and your husband attend a free consumer credit counseling session. They may be able to give you some guidance on how to deal with these kinds of situations when they arise.

An unsecured creditor cannot take away your property without suing you first and getting a judgment. The law allows you to "exempt", or protect from your creditors, a significant amount of property. In NC your wages cannot be garnished for a debt. Unsecured creditors like credit card companies and signature loan lenders often mention things like taking away property or garnishing wages when they learn that a debtor is struggling, in an attempt to scare them into keeping things current and letting something else go unpaid. If you are ever in a bind like this, you should pay your secured creditors before paying unsecured creditors. Don't liquidate your retirement funds to stay current on unsecured debt, either. Retirement accounts are exempt from creditors even when filing for bankruptcy.

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Answered on 4/26/06, 8:57 am


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