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Can A Creditor Add A Penalty Clause?

Sometimes a creditor will refuse to believe the debtors promises of payment. This often happens if the debtor has been unable to keep up with a previous payment agreement. In that case, creditors might be persuaded to accept a new repayment plan if the debtor offers to include a penalty clause in the agreement. Such a provision states that if the debtor defaults in making any of the agreed­upon payments, they owe the creditor an amount of money in addition to the original debt. The amount of such a penalty should be sizable (probably no less than $100.00), to serve as a real incentive for the debtor to keep current on their payments. Offering to include such a penalty clause demonstrates their honest intent to pay.

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This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified creditors rights lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local creditors rights attorney to discuss your specific legal situation.

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