DEFINITION of 'Restitution Payments'

The payment of punitive damages that are owed as a result of wrongdoing or neglect. Restitution payments are an attempt to restore a person to a previous financial condition that should have persisted save for the improper actions of another person or entity. Restitution payments are usually paid according to a schedule dictated by the court, but often will not begin until after the defendant/payor has been released from prison, if jail time is also served.

BREAKING DOWN 'Restitution Payments'

Some types of restitution payments are controversial, such as payments to descendants of black slaves or Holocaust survivors. Some restitution payments are tax free, but payors cannot deduct restitution payments by donating them to a qualified charity.

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