Legal Term Tuesday: Arrears

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Legal Term Tuesday: Arrears

This is the latest entry in BeenVerified’s legal term library designed to help you better understand public record information, criminal records and related terminology. The information in this article is provided for informational purposes only and does not constitute legal advice.

When a person falls behind on payments or debt owed to an individual or organization, they are said to be in arrears. What are the different types of arrears and will owing a debt show up on an individual’s public record? Read on to find out.

Arrears can be applied to a number of different situations, but almost always has to do with some form of debt nonpayment. The Free Dictionary by Farlex defines arrears as “money not paid when due, usually the sum of a series of unpaid amounts, such as rent, installments on an account or promissory note, or monthly child support.”

Being in “arrears” as an individual commonly occurs in situations related to child support payments, nonpayment of mortgage, rent or utility bills or failing to pay any agreed debt repayment plan. The consequences for each scenario can vary greatly and each law as is typical can differ by state.

When it comes to the payment of debt, being in arrears is usually the first step of a chain of events involving delinquent debts, where if the situation cannot be worked out, the creditor has a right to legally reclaim the property or lost money through the courts.

It’s important to realize that even being one day late on some forms of debt payments puts the debtor’s account in arrears, and with it can come consequences.

Some rental agreements have grace periods of 5 days or more before a payment is considered late and the renters are considered in arrears, but this is highly dependent on the language of the lease. A grace period is not automatically recognized by any state, according to Nolo.com. However, within weeks of being in arrears, the renters could be looking at an eviction notice depending on the constitution of their landlord and the state’s laws. Late payments on utility bills will mean a loss of access to the utility in question, but vary widely from state to state as when this occurs, according to Turn.org.

Nonpayment on a mortgage may take longer for the creditors to move upon and initiate a foreclosure. There are typically more complex laws a creditor must comply with to initiate a foreclosure proceeding against the tenants, partly due to abuses during the Financial Crisis.

Nonpayment of child support can often mean a review of the court case in question and more severe restrictions placed upon the person proven to be in arrears. This can include wage garnishment and in some extreme cases, prison time, according to DivorceNet.

Additional situations where an individual could be in arrears includes the nonpayment of taxes to the IRS and nonpayment to credit card companies or merchants for goods and services rendered.

While being in arrears itself does not automatically show up on a public records search, accounts in extended arrears can lead to criminal and civil complaints along with potential bankruptcy, much of which will show up on a public records search.

Celebrities in arrears have included singer Lauryn Hill, skier Lindsey Vonn and Lindsey Lohan, according to Daily Finance.

Disclaimer: The above is solely intended for informational purposes and in no way constitutes legal advice or specific recommendations.

About the author

Justin Lavelle

Justin Lavelle is the social media director and blogger for BeenVerified.com. He is based out of Northern Virginia.