What does it mean to cure a default?

On Behalf of | Oct 21, 2021 | Firm News |

After a debtor fails to pay you what they owe, Ohio law states you have the right to repossess the property you lent them as soon as the default. Though you probably know that is easier said than done. There are a lot of logistics to collecting any property.

Once you take any collateral into your possession, there is a process to follow and the debtor may seek to cure the default in order to get the property back.

Ohio debt curing

As Ohio statutes detail, a debtor has 20 days to deliver on your demands in order to cure their default.

These demands include all due or past due installments, any delinquency charges and all reasonable expenses incurred by your retaking possession. Further, the debtor must provide a deposit in cash or bond in the amount of two installments to help secure future payments.

If the debtor cures the default, then you, as the secured party, must make it available to the debtor at a reasonable time and place. If further, reasonable costs accrue as a result of your returning it, you may add those expenses to the time balance.

This right allows a debtor to do this no more than once.

Alternatives to standard debt curing

One way to alter this standard is by implementing an alternative understanding in the agreement. With a contract that clarifies the change, a debtor agrees to work with the debt the way you deem fit. As with all loan agreements, having a well-drafted contract from the beginning may help avoid unwanted issues from debtors after the ink dries.