Measure content performance. Develop and improve products. List of Partners vendors. Arrears is a financial and legal term that refers to the status of payments in relation to their due dates.
The word is most commonly used to describe an obligation or liability that has not received payment by its due date. Therefore, the term arrears applies to an overdue payment. If one or more payments have been missed where regular payments are contractually required, such as mortgage or rent payments and utility or telephone bills, the account is in arrears.
Payments that are made at the end of a period are also said to be in arrears. In this case, payment is expected to be made after a service is provided or completed—not before.
Arrears, or arrearage in certain cases, can be used to describe payments in many different parts of the legal and financial industries, including the banking and credit industries, and the investment world. The term can have many different applications depending on the industry and context in which it is used. As noted above, arrears generally refers to any amount that is overdue after the payment due date for accounts such as loans and mortgages. Simply put, it means your payment is late.
Accounts can also be in arrears for things like car payments, utilities, and child support—any time you have a payment due that you miss. Being in arrears may or may not have a negative connotation depending on how the term is used. In some cases, such as bonds, arrears can refer to payments that are made at the end of a certain period. Similarly, mortgage interest is paid in arrears, meaning each monthly payment covers the principal and interest for the preceding month.
When two parties come to an agreement in a contract, payment is usually made before or after a product or service is provided. Payment made before a service is provided is common with rents, leases, prepaid phone bills, insurance premium payments, and internet service bills.
These types of payments are referred to as payment in advance. There are also instances where bills or liabilities come due after the service has been provided such as utility bills, property taxes, and employee salaries. These payments are known as payment in arrears, occur at the end of the period, and are not classified as late. They do, however, fall into arrears if you don't pay them by the due date.
That said, fully paying outstanding Arrears will prevent the negative impact from worsening, especially if it prevents the lender from issuing a default.
What are Arrears On your Credit Report, Arrears are consecutive missed payments of two months or more. How do Arrears impact my Credit Rating? How long do Arrears stay on my Credit Report?
Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation. Popular Articles. Related Articles. Run your entire business with QuickBooks Buy Now!
0コメント