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Creditor-Friendly Changes to North Carolina’s Accord and Satisfaction Law

3.17.2017

A creditor can now reinstate a disputed debt that has been inadvertently discharged.

The North Carolina Legislature recently amended its accord and satisfaction law to include creditor-friendly revisions that make it easier for creditors to avoid inadvertently discharging a disputed debt. Effective October 1, 2016, S.L. 2016-52 was enacted to conform North Carolina’s accord and satisfaction law to the corresponding provision of the Uniform Commercial Code, Section 3-311(c)(2), and allows a creditor to reinstate a debt that was paid in full satisfaction by a debtor; provided that the creditor repays such amount within 90 days and the debt payment was not tendered to a person, office, or place designated by the creditor under N.C.G.S. 25-3-311(c)(1).

Under North Carolina law, a debtor can satisfy a disputed debt if the debtor tenders to a creditor, and the creditor accepts such tender, a payment that is clearly communicated to be in full satisfaction of the disputed debt. The widespread use of automated check processing systems increased the risk that creditors would inadvertently accept such payments and accidentally discharge a disputed debt. This amendment provides recourse for creditors who fall victim to such a scenario and significantly reduces the risk of inadvertent discharge.

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