Understanding Remission of Debt

The government, most businesses and institutions allow for remission of debt due to extenuating circumstances. Remission is defined as lessening the intensity, forgiveness or complete pardon. To forgive a liability either in whole or in part can be considered a remission of debt. Generally, this is done when unusual circumstances are involved. A lendee that is injured or killed may have her debts placed in remission rather than placed upon next of kin.

Findings of Debt and Remission

In the military, a solider may be placed in charge of equipment and personally responsible for any damage. If an item is damaged, a court may find him liable and owe the United States the value of the equipment damaged.

Example of Remission

The solider could appeal the verdict and bring proof that the equipment was damaged en route and that he had not taken responsibility of the items at the time they were damaged. In this case, the appeals court can rule a remission of the debt, meaning the solider no longer owes any monies.

Remission Within the Contract

Remission of debt does not only occur in unusual circumstances, but can be part of the loan contract. This tactic is used by countries that are not well developed to encourage young people to acquire needed skills to aid the nation and return from their schooling debt free.

Remission Upon Completion of Duties

Students from one country may take educational loans and get a degree in another country. There could be a stipulation that after their education, if they return to their native country and work within a certain career field, the government will place their student loans in remission.

Legal Guidelines

Many states have clear guidelines in further details of remission of debt. The State of Louisiana has a law (Article 1888) that remission can be expressed, meaning the lender can sign a letter stating that the debt is in remission; or tacit, meaning that the lender did something that indirectly shows the debt is forgiven. Article 1890 states that remission is effective when communication of one type or another is received by the person or company that owes debt to the creditor. This means that a credit card company may find that they made errors in the amount owed by a client. If they send an email to the client stating their error and that a partial amount of debt is forgiven, the forgiveness of the loan is effective on the date the client receives the email.