Payment extension

What is a payment extension?

A payment extension refers to an agreement in which a financial obligation that is already due can be settled at a later date. In other words: The payment is postponed without the creditor giving up the right to the money. The outstanding invoice remains valid—it is simply rescheduled.

This type of arrangement is common in debt collection. The creditor shows goodwill by giving the debtor additional time to pay the outstanding amount. It is a voluntary decision by the creditor that can help prevent escalation—for example, through a judicial dunning process.

Who can grant a payment extension?

As a rule, only the creditor can decide whether a later payment date is acceptable. The creditor alone has control over the outstanding claims. If a debt collection agency is involved, it may also approve an extension—but only if it has been explicitly authorized to do so by the creditor.

The debtor cannot enforce a new payment date unilaterally. They may submit a request or ask for more time, but the decision must actively come from the creditor. Otherwise, the original due date remains in effect.

When is a later payment legally agreed?

A payment extension only exists if there is a clear agreement that the outstanding amount may be paid later. This means the creditor must explicitly accept the request. Without this approval, there is no legally valid extension.

It is not enough for someone to skip a payment or announce that they will pay at a later time. A valid arrangement exists only if both parties—the creditor and the debtor—agree to postpone the due date.

How is a payment extension arranged?

An extension can be agreed upon informally. This means there is no legal requirement for a written contract or formal document. However, in practice, it is advisable to document the new payment deadline in writing—by email or via a customer portal.

Typical process:

• The debtor asks for a later payment date.

• The creditor or debt collection agency reviews the request.

• If approved, a new payment deadline is set.

• Both parties are aware of the new due date.

A one-sided message from the debtor—such as “I’ll pay next month”—does not count as a binding agreement.

How long can a payment extension last?

There are no legal limits on the duration. That means there is no minimum or maximum period prescribed by law. The length of the extension depends on the individual case and is at the discretion of the creditor.

Often it is just a few weeks, sometimes two to three months. If large amounts are involved or the debtor is facing financial difficulties, the timeframe may be extended. In some cases, a payment plan is offered, starting with a pause followed by installments.

What matters most: The new deadline should be clearly and explicitly defined.

In what form is the extension agreed?

A new payment date can be recorded in various ways—as long as the arrangement is understandable to both parties. Common formats include:

• A short email confirming the new deadline

• A written note in the account records

• A verbal agreement followed by confirmation

• A digital message via customer portal or collection system

Depending on the amount involved and the length of the extension, it may be wise to keep a record of the agreement. Especially in the event of a dispute, proof of what was agreed—and when—can be important.

Which parts of the claim are affected?

A payment extension always refers to the due date—that is, when the money must be paid. It does not change the claim itself. The amount remains the same, as does the reason for the debt.

The agreement may apply to the entire outstanding balance or just a portion. Possible examples include:

• An extension for the full amount

• A later due date only for the principal amount

• A delay for individual fees, such as interest or collection charges

Whatever is covered by the arrangement should be clearly defined. That way, both parties know which parts of the claim are affected and when payment is expected.