Practice question
After confirmation, the debtor partly defaults on the agreement. A creditor moves under Rule 3(A), Section 10 for termination. The debtor argues only total default can restore creditors' previous rights. Which is correct?
- Any partial payment makes the agreement irrevocable despite default.
- The rule covers failure wholly or in part; upon the proper motion the court declares termination and prior creditor rights revest.
- Only the debtor may seek termination for its own default.
- Partial failure automatically discharges every unpaid balance.
- The creditor must first obtain a new private contract from the debtor.
Legal references
- RA 10142, Sections 95 and 99-102, suspension of payments: https://lawphil.net/statutes/repacts/ra2010/ra_10142_2010.html
- Supreme Court A.M. 15-04-06-SC, April 21, 2015, FLSP Rules, Rule 3(A), official PHILJA publication: https://philja.judiciary.gov.ph/files/bulletin/Bul66.pdf
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