Legal Definitions - in duriorem sortem

The Latin phrase in duriorem sortem (pronounced "in doo-ree-OR-em SOR-tem") is a legal principle, primarily found in civil law systems, that guides how a payment should be allocated when a debtor owes multiple debts to the same creditor but does not specify which debt the payment is intended for. Under this principle, the payment is presumed to be applied to the debt that is most burdensome or most disadvantageous for the debtor to leave unpaid.

This typically refers to a debt that, if not discharged promptly, would result in the greatest negative impact on the debtor. Such debts might include those with the highest interest rates, impending deadlines that trigger penalties, or those that carry more severe legal consequences.

Here are some examples to illustrate this principle:

• Example 1: High-Interest Debt

  Imagine a person who has two outstanding personal loans from the same bank. Loan A has a variable interest rate that has recently climbed to 18%, while Loan B has a fixed interest rate of 8%. The person makes a payment to the bank without specifying which loan the money should be applied to.

  According to the principle of in duriorem sortem, the bank should apply the payment to Loan A. This is because Loan A, with its significantly higher interest rate, represents the "more burdensome" debt for the debtor. Paying it down first reduces the overall interest accrual, making it the most financially advantageous allocation for the debtor.

• Example 2: Debt with Impending Penalties

  A small business owes its utility company for two separate invoices: one for electricity from last month, which is now 45 days overdue and will incur a substantial late fee if not paid within the next week; and another for water usage this month, which is due in two weeks. The business sends a partial payment to the utility company without indicating which invoice it covers.

  Under in duriorem sortem, the payment should be applied to the overdue electricity invoice. This debt is considered "more burdensome" because failing to pay it promptly would result in an additional financial penalty, making its immediate discharge more critical to the business than the water bill, which is not yet overdue.

• Example 3: Debt with Personal Guarantee

  A company owner has two business lines of credit with the same financial institution. Line of Credit X is a standard corporate loan, while Line of Credit Y is a smaller facility for which the owner has provided a personal guarantee, meaning they are personally liable for the debt if the company defaults. The owner makes a payment to the institution without specifying which line of credit it should cover.

  The principle of in duriorem sortem would suggest that the payment be allocated to Line of Credit Y. This debt is considered "more burdensome" for the debtor (the company owner) because it carries the added personal risk and liability, making its prompt discharge more critical to the owner's overall financial well-being beyond just the company's finances.