How to Write a Check Memo to Creditors as "Paid in Full" For a Contract

Writing "paid in full" on the memo line of a check is valid for full payment of a contract -- in certain situations. However, Lawyers.com reports that debtors cannot randomly use the strategy to pay off contracts for less than the amount owed. To resolve a contract for less than the full amount owed, the debtor and the creditor must agree to a settlement, according to the website. Once that happens, the debtor can resolve the contract by writing a check for the settlement amount and including "paid in full" on the memo line.

Instructions

1

Get a copy of the contract or current billing statement for the debt. Contact the creditor, if necessary, to request the information.

2

Contact the creditor to ask for a settlement offer to end the contract or the debt. Settlements are common in many forms of debt, including credit cards. SmartMoney reports that credit card companies sometimes settle credit card contracts for 20 to 70 percent of the outstanding balance on the card. Settlement discussions are often available when a party to a contract is not living up to the terms of the agreement, such as making payments as agreed.

3

Obtain details of the settlement in writing. The offer should list the settlement amount and should also indicate that the agreement will be considered "paid in full" once the creditor receives payment.

4

Write the check for the agreed upon amount. Write "paid in full" on the memo line and also include an account number or name and description of the contract.

5

Keep copies of the check and the settlement agreement for your records.