For All Outstanding Debts

[waltman]

I was watching one of the many judge shows on tv.

I came across an interesting case.

A man owed money to a person and was making incremental payments, then decided to stop paying because he thought he payed off his debt.

The person took the man to court suing for the outstanding debt.

The Judge told the man if he was unsure if payments were complete....he could have wrote on the back of his check above the endorsement line "For All Outstanding Debts".

If the person signed and endorsed and then deposited the check this would absolve the man from paying any outstanding balance and would be legally binding!

Is this true? If it possible to send someone you owe $XXX amount, but are not sure what the exact amount is, a check like this? Does it hold up and are there any limitations?

 

[justalayman]

It's called an accord and satisfaction. In some states in some situations it does act to cause the payment to be considered payment in full.

 

[waltman]

Oh, very interesting, I thought it was just something they made up for TV.

Can this apply other types of collection?...such as an out of court settlement? Will this stop a person from trying to collect or settle on cases of the same nature?

Example:

I backed my car out of the driveway and hit another car. The person wants to settle out of court and gets a body repair estimate for $500. I pay with a check endorsed with "For All Outstanding Debts".

If the person's car ends up costing more to repair....would it be considered payment in full if they already cashed the check?

Thank you for your quick reply.

 

[justalayman]

Each state that recognizes an accord and satisfaction has laws addressing the matter. That means an answer isns state specific.

In general your scenario would not work. An accord and satisfaction is generally allowed when there is a valid dispute as to the actual amount of debt. In your latest scenario you would be attempting to use it as a release of
Future liability. If you look at you first scenario you should notice it involves the dispute of the amount of
Debt and it involves ancurrently owed debt. That is where it would be applied.

 

[single317dad]

The second scenario could work that way, but I'd draw up a second document with both parties agreeing to the amount as payment in full (settlement) for damages. The advice of an attorney well versed in auto insurance would be helpful, as it's basically the same scenario.