Imputation Of Payment in United States

Imputation Of Payment Definition

In civil law. The application of a payment made by a debtor to his creditor. The debtor may apply his payment as he pleases, with the exception that in case of a debt carrying interest it must be first applied to discharging the interest. The creditor may apply the funds by informing the debtor at the time of payment. The law imputes in the neglect of the parties to do so, and in favor of the debtor. It directs that imputation which would have been best for the debtor at the time of payment. Hence it applies the funds to obligations most burdensome to the debtor; e. g., to a mortgage rather than to a book account, and to a debt which would render the debtor insolvent if unpaid, rather than to any less important one. If nothing else appears to control it, the rule of priority prevails. In Louisiana the preceding civil law rules are in force. The statutory enactment (Civ. Code, art. 2159 et seq.) is a translation of the Code Napoleon (articles 1253-1256), slightly altered. See Poth. Obi. note 528, Translation by Evans, and the notes. Payment is imputed first to the discharge of interest. 1 Mart. (La.; N. S.) 571; 10 Bob. (La.) 51; 5 La. Ann. 738. But if the interest was not binding, being usurious, the payment must go to the principal. (1)

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This definition of Imputation Of Payment is based on The Cyclopedic Law Dictionary. This entry needs to be proofread.