Requesting Payment by Instalments from a Creditor in Malta

Why put the request in writing

A written request for instalments serves two purposes: it formally acknowledges the debt and it sets out a concrete proposal that the creditor can accept, reject or negotiate. An acknowledgement of debt is useful evidence, and it also interrupts the running of any prescriptive period that may otherwise apply to the claim.

Under the Civil Code, several categories of claims are subject to five-year prescription, including actions for payment of interest on sums taken on loan and actions for payment of any other debt arising from commercial transactions, unless the debt results from a public deed or a shorter period applies under Chapter 16, 2156. A debtor who wishes to negotiate rather than dispute liability should make clear in the letter that the debt is acknowledged, so as to avoid any ambiguity as to whether payment is being offered on a disputed or undisputed basis.

What the letter should contain

• A clear acknowledgement of the debt, its amount, origin and date it fell due.
• A specific, realistic instalment proposal, stating the amount and frequency of payments and the proposed start date.
• An offer regarding interest, since where no place or manner of appropriation is agreed, payment is applied under the appropriation rules in Chapter 16, 1171, which give priority, among other things, to debts bearing interest over debts that do not.
• A statement of where and how payment will be made, bearing in mind that under Chapter 16, 1159 payment must be made at the place specified in the contract, or, failing that, according to the default rules of that article.
• A request for written confirmation of acceptance, so both parties have certainty as to the agreed schedule.

Interest on late payment in commercial transactions

Where the debt arises from a transaction between undertakings, the creditor is entitled to interest for late payment without the need for a reminder, once it has fulfilled its own contractual and legal obligations and has not been paid on time, under Chapter 13, 26C. This interest runs, depending on the circumstances, either from the day following the due date fixed in the contract or, where no date is fixed, from the expiry of thirty calendar days after receipt of the invoice or of the goods or services, as set out in the same article.

In addition to interest, a creditor in a commercial transaction is entitled to recover certain fixed compensation for recovery costs without the need for a reminder, under Chapter 13, 26E. Where an instalment is not paid on the agreed date, interest and compensation are calculated solely on the overdue amount, so a debtor offering a repayment plan should ask the creditor to confirm this basis of calculation expressly.

A debtor should also be aware that a contractual provision which excludes interest for late payment is deemed grossly unfair, and one excluding compensation for recovery costs is presumed grossly unfair, under Chapter 13, 26G. This means a request to waive interest entirely is unlikely to bind the creditor unless the creditor agrees to it expressly and in terms that are not grossly unfair to itself.

How partial payments are applied

If the instalment letter does not specify how each payment is to be appropriated, the default rules apply. A debtor may, when making a payment, declare that it is to be applied to a particular debt, but may not, without the creditor's consent, apply it to a debt not yet due in preference to one already due, nor to interest for a later year in preference to interest for an earlier year, as provided in Chapter 16, 1168.

In the absence of any such declaration, the statutory order of appropriation in Chapter 16, 1171 applies: undisputed debts before disputed ones, due debts before those not yet due, debts bearing interest before those that do not, secured debts before unsecured ones, and, failing any other basis for preference, the oldest debt. It is therefore advisable for the instalment letter to state expressly how each payment should be appropriated, to avoid relying on these default rules.

Letter Requesting Payment of a Debt by Instalments

[Your Name / Company Name]
[Your Address]
[City, Postal Code, Malta]
[Email / Phone]

[Date]

To:
[Creditor's Name / Company Name]
[Creditor's Address]
[City, Postal Code, Malta]

Subject: Request for payment of debt by instalments – [Reference / Invoice / Contract No.]

Dear [Creditor's Name / Sir or Madam],

I acknowledge that I owe you the sum of [amount in EUR], arising from [brief description: invoice no. / contract dated / loan agreement dated], which fell due on [due date] and remains unpaid.

I acknowledge this debt in full and do not dispute its validity or amount. I am, however, currently unable to settle the outstanding sum in a single payment, and I am therefore writing to propose a repayment plan on the following terms:

- Total outstanding amount: [amount in EUR]
- Proposed number of instalments: [number]
- Amount of each instalment: [amount in EUR]
- Frequency of payments: [monthly / other]
- Date of first instalment: [date]
- Method of payment: [bank transfer to account IBAN ... / other], to be made at [place, if relevant]

With regard to interest, I propose that [interest continues to accrue on the outstanding balance at the agreed contractual rate / statutory rate applicable to the transaction, until full settlement] and that, should any instalment not be paid on its due date, interest and any recovery compensation be calculated solely on the amount then overdue.

I would be grateful if you could confirm your acceptance of this proposal in writing by [date], so that payments can commence as set out above. Should you wish to discuss alternative terms, I remain available to do so.

Yours faithfully,

[Signature]
[Your Name]

Fill in all bracketed fields with the actual figures, dates and references relevant to your debt, and adjust the interest clause to reflect what has actually been agreed or what applies to your specific transaction.

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This template is based on the Malta legislation in the Europaius corpus. Verify the current wording before use; this does not constitute legal advice. Legal Advisor · Europaius MT