What Happens When a Creditor Accepts Late Payments?

Have you consistently been making late payments to a creditor or debt collector? If so, the creditor or debt collector may be obligated to continue accepting the late payments.

The Mutual Departure Doctrine

The Mutual Departure Doctrine, O.C.G.A.  §13-4-4, requires that if the parties to a contract, during the course of the execution of a contract, depart from its original terms, neither party can recover without reasonable notice to the other of intention to rely on the exact terms of the original agreement. Until such notice, the original terms of the contract may be suspended by departure.

The most frequent application of this doctrine is where the customer makes regular payments after the due date, and the creditor or debt collector is accepting the late payments with no objections.

The Mutual Departure Doctrine Involves a Two-Step Determination:

  1. Has there been a mutual departure from the terms of the written contract?

The first step is to determine if there has been a mutual departure from the written contract terms and money has been paid and received under such departure.

This rule requires frequent late payments. Therefore, a debt collector accepting one late payment will not be enough to cause the application of the rule. Vaughn v. Wrenn Bros., Inc., 163 Ga. App. 383, 384 (1982).

  1. Has reasonable notice been given of intention to rely on the exact terms of the original agreement?

If the first question is answered in the affirmative, the next step is to determine if reasonable notice has been given of the intention to rely on the exact terms of the original agreement. Snyder v. Time Warner, Inc., 179 F.Supp.2d 1374, 1380 (N.D. Ga. 2001).

In addition to regular, late payments, nonpayment also falls within the ambit of O.C.G.A. § 13-4-4 where there is “a pattern or course of conduct evidencing an agreement or waiver of the provisions in the original contract relating to non-receipt of monthly payments.” Vaughn v. Wrenn Bros., Inc., 163 Ga.App. 383, 384 (1982).

How to preclude a Mutual Departure Defense

A creditor may rebut a mutual departure defense by providing evidence that the creditor disapproved of the late payments, and this disapproval was conveyed to the debtor. See Duncan v. Lagunas, 253 Ga. 61 (1984) (holding that no waiver was supported where the creditor orally expressed displeasure with debtor’s late payments).

The easiest way to preclude a successful mutual departure defense where late payments have been accepted is to notify the customer that the creditor intends to go back to the terms of the contract and will not accept any further late payments. If this notification is sent and the creditor thereafter continues to accept late payments without further notice that such payments are a breach of the agreement, the Court may be authorized to find that the defendant is not in default. See Williams v. Sessions, 171 Ga. App. 662 (1984).


Diwan Law works hard to provide positive results for its clients dealing with debt collection issues.

If a debt collector serves you with a lawsuit, you need an experienced debt collection lawyer. Contact Diwan Law today at 404-635-6883.

About Diwan Law

Diwan Law is dedicated to getting our clients the best result possible.

Diwan Law handles debt collection actions against consumers in the Magistrate, State, and Superior Courts of Georgia.

Diwan Law represents clients facing:

  • Debt buyer debt collection lawsuits (i.e. Midland Funding, Portfolio Recovery Associates, Asset Acceptance, Cavalry Portfolio Services, Unifund, etc.);
  • Original creditor debt collection lawsuits (i.e. American Express, Citibank, Suntrust, etc.);
  • Debt collection lawsuits arising from credit cards, automobile repossession deficiencies, apartment leases, and other contract-related matters;
  • Dormant judgment revival; and
  • Garnishment actions on bank accounts or wages.

Contact Diwan Law at 404-635-6883 for a free case evaluation.