Dispute Letters Addressing California Full Payment Law

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When settling debts in the state of California, there are instances where different rules apply. A creditor is allowed to cross out the full payment language on a settlement check which reserves the right for them to sue you in the future for the balance due. But debtors have a way around it. This procedure and letter describe the process.

IMPORTANT:

  • Navigating around this law requires specific steps and language. To do so, follow this procedure exactly.
  • This requires two letters. Both should be sent with returned receipt. Send the first and wait 30 to 90 days to give the creditor time to object.
  • If you do not receive any objection from the creditor, send your check with a letter stating that the check constitutes payment in full.
  • Write on the bottom of the check on the front along the top or bottom the exact language you used in the second letter “This check is tendered in accordance with my letter of (date). If you cash this check you agree that my debt is paid in full.”

Letter #1

Date



Your Full Name

Address 

City, State, ZIP


Creditor Name
Address
City, State, ZIP 


Account Number: XXXXXXXXX

To Whom It May Concern:

This letter concerns the money I owe you. For the past three months, I have received bills from you stating that I owe (insert amount) for (what money was for). Because of the inferior condition of the merchandise I have received, I feel I owe you no more than (insert amount). It is obvious that there is a good faith dispute over this bill.

To settle this debt, I will send you a check for (insert amount) with a restrictive endorsement stating that if you cash the check it will constitute an accord and satisfaction. In other words, you will receive from me a check that states “cashing of this check constitutes payment in full.” If you cash this check, that check will take care of what I owe you.

Sincerely,
Your Name

Letter #2

Date



Your Full Name

Address 

City, State, ZIP


Creditor Name
Address
City, State, ZIP 


Account Number: XXXXXXXXX

To Whom It May Concern:

Enclosed is a check for (insert amount) to cover the balance of the above-mentioned account. This check is tendered in accordance with my letter of (date). If you cash this check, you agree that my debt is satisfied in full.

Sincerely,
Your Name

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