What is an acceleration clause and can a holder of the debt threaten to accelerate the indebtedness if the debtor always makes his or her payments after the due date but within the "grace period"?
Answer: Acceleration clause- It is a provision that allows a lender to require a borrower to repay all the outstanding debt if borrower does not meet certain requirements. This is related to mortgage loans. This clause forces the borrower to repay the loan before the standard term of loan expires.
Acceleration clause helps the lenders to mitigate default risk from borrowers side.
Grace period- In this clause, grace period is given to borrower. Grace period gives borrower time to gather the funds to repay the loan. Lenders may be agree upon giving grace period to borrowers. If debtor makes his payment after due date but before the grace period ends then it is perfectly alright.
What is an acceleration clause and can a holder of the debt threaten to accelerate the...