A payment upon an interest bearing debt will be applied to the interest in preference to the principal,1 and if the debtor is indebted to the creditor in several debts, each bearing interest, payment should be applied to interest on all the debts before it is applied to the principal of any one debt.2 Even if the payment is equal in amount to the principal, it must be applied first to discharge overdue interest.3 Where the law allows interest on interest, a payment should be applied first to discharge overdue interest on interest; second, to discharge overdue interest; and third, to discharge the principal.4 If the law does not allow interest on interest, a payment less than the amount of the interest due is to be credited upon the interest, but the balance of the interest is not to be added to the principal.5