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Every human discipline has its myths. Medicine, health, nutrition and physical science, among others, are encumbered by widely accepted beliefs that are untrue. Among all the physical and social sciences, law may be the most heavily burdened with myths. This is explained, in large part, by the enormous complexity and inconsistency of the law. One of the most popular legal myths is the belief that a payment of $1 a month to a creditor will prevent him or her from suing on an obligation that is past due. As with all myths, this is not true. If you are required to make installment payments on a loan or credit purchase, the minimum payment due generally appears on a monthly statement from the creditor or on your loan documents. If this minimum payment is not made, your obligation for that billing period remains unsatisfied. Some debtors make payments of less than the required minimum amount in the belief that doing so will demonstrate good faith. It indeed may be good faith, and if the creditor is willing to accommodate you, consider it good fortune as well. Often, when less than the required amount is paid, problems arise. At a creditor's option, many debts become due and payable in full when such a partial payment is made. This generally permits a creditor to sue you and insist on payment of the entire unpaid balance of the debt together with attorneys fees, court costs and interest. Credit cards issued by financial institutions usually calculate the minimum monthly payment as a percentage of the total debt balance. Using the card amounts to an implied agreement with the terms of the credit-card contract prepared by the financial institution. This obligates the owner of the card to make payments as required by the contract. Anything less is a default. Read credit agreements and loan documents carefully and understand your rights and obligations before you accept credit. If you have questions about a credit card or loan agreement, ask for written clarification or direct your questions to a lawyer. Do not fall victim to the myth that $1 per month will keep a creditor off your back while you get your financial affairs in order. This is about as likely as Zeus ruling the world from atop Mount Olympus. |