What is an installment agreement?

It’s a written agreement in which the debtor acknowledges the debt and agrees to pay it off in regular installments – for example, 2,000 CZK per month. The creditor agrees to postpone or split the repayment instead of enforcing the entire debt immediately.

Why it’s risky without a lawyer

These agreements are usually drafted by the creditor or their legal representative – with no regard for protecting the debtor. They often include a debt acknowledgment clause, which resets limitation periods. And most importantly: they contain a loss of benefit of instalments clause.

⚠️ Risk of loss of benefit of instalments

This clause means that if you miss even a single payment, or if it’s not paid in full or on time, the creditor has the right to demand immediate repayment of the full remaining debt. In other words – one mistake, and the whole debt becomes due again, including interest and penalties.

What to watch out for

• Always have a lawyer review the agreement before signing.

• Ask whether the terms can be adjusted – e.g. allowing one late payment without penalty.

• Don’t sign anything you don’t understand.

• If you already signed it, guard those due dates carefully.

🧩 Real-life Example

Mr. J. agreed with his creditor to pay 5,000 CZK monthly. He signed the agreement without legal help. After three months, he was two days late. The creditor demanded the full outstanding amount – 85,000 CZK. Legally, they could. The agreement said: “In case of delay with any payment, the debtor shall pay the full remaining balance immediately.”

✅ Recommendation from a Lawyer

An installment agreement can be a helpful solution – but only if it’s fair and balanced. As a lawyer, I always recommend having the agreement reviewed. It’s not a formality – it’s protection against a trap that could cost you tens of thousands. Acknowledging the debt also restarts the limitation period – which works in favor of the creditor.