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dylatess, Attorney
Category: Legal
Satisfied Customers: 5142
Experience:  37 plus years representing clients with their legal issues
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We are sellers of a property...We entered into an installment

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We are seller's of a property...We entered into an installment sales w/ the buyer. So many years at a certain payment w/ a certain interest rate w/ a ballon payoff. After 3 years now, he has become deliquent with his scheduled payment the last 3 months. He is sending almost 2-3 months of payments...$1500 payment.
QUESTION IS: for accounting purposes, how do I treat this payment? Can we recoup the interest owed since the last payment (3 months ago)? Do I go back and apply the payment towards interest and any fremaining payment funds go to principle?
Hello and thank you for your question. For over 34 years I have answered questions just like yours. And I look forward to assisting you. You are correct. Since he was delinquent, all payments that are received after the due date go to unpaid interest and the balance goes to the principal. Likewise, if your note includes late fees, that would also be deducted from the payment as well. I also recommend that you send the borrower a breakdown of how his payment was applied.
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