Protecting the Rights of Consumers For Over 25 Years

Question: Can I send a creditor a check for less than the full balance marked “cashing this check releases all claims against [name] and is payment in full”?

Answer: If there is a good faith dispute between you and the creditor concerning liability or the amount due, and if you clearly make a good faith offer to the creditor to resolve the dispute by tendering less than the full amount claimed, and the creditor accepts payment, a court will consider the matter settled.

It is important to note that there must be a good faith dispute. For example, if you order a product from a store for $1,000 and it does not work properly, and you have unsuccessfully attempted to get the store to make it work or replace it, and the store demands that you pay $1,000, you may have the right to send a check for $200, which you believe represents the value of the defective item to you.

The offer must be conspicuous. If the creditor has provided an address for correspondence and disputes that is separate from the payment address, you cannot send your check to the payment address. You must use the address provided for correspondence and disputes. Check your monthly statement. In addition, I would strongly suggest a separate letter in addition to writing a statement on the check. In the letter state what the dispute is, what you have done to resolve it, and why you are offering less than the full balance.