I'm handling a RM10,000 debt where the debtor initially refused an interest clause in the settlement terms.
Without consequences for late payment, he has been dragging every month's instalment. I've been chasing him every week; and this fellow is treating the schedule more like a suggestion than a strict agreement.
This morning, I told him that if he continues his tardiness on payments, my client would rather terminate the settlement and proceed straight to litigation - judgment, freezing his bank accounts, seizing assets, etc.
We would only withhold on the condition 1.5% per month / 18% per annum interest is imposed.
He considered his options and agreed. Now, at the very least, there is some consequence for non-payment; and my Client will have the benefit of interest to offset some of his legal costs.
Payment discipline usually appears only when non-payment carries a cost. Human beings respond to incentives.
A late payment interest clause is a non-negotiable in any settlement agreement.
Rudi Cheu (rudi@rulecolaw.com) is a content creator under the Newswav Creator programme, where you get to express yourself, be a citizen journalist, and at the same time monetize your content & reach millions of users on Newswav. Log in to creator.newswav.com and become a Newswav Creator now!
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