Imputation of Payments Law and Legal Definition

Imputation of payments is a term of civil law. Imputation of payments arise when a debtor who has more than one debt pays money but do not specify to the creditor to which debt it has to be allocated or adjusted.

Generally, certain rules are set to manage imputation of payments. Various options are laid out in the rules. The debtor can choose the debt to which the payment is to be adjusted. If the debtor fails to do so, a creditor may adjust the payment to his/her choice. Further, payment may be made against largest debt when both the creditor and debtor have failed to impute the payment. In case there are several debts of the same amount, payment is to be allocated to the oldest of the debts.