The Debt Settlement Agreement is a legal document that is needed when the parties are mutually interested in reduction of the loan amount or the amount of interest for making the repayment possible. The Debt Settlement Agreement is made between the debtor and creditor. This agreement gives the advantage of the reduced amount of payment and the creditor gets the benefit in the form of before time full payment of the loan. This is often baffled with debt consolidation or debt management, but actually it is quite different. In the debt consolidation the actual amount is converted into installments to make the payment possible and the debtor is bound to pay the monthly installment. On the contrary, in the debt settlement agreement, both the parties become agree for a reduced amount in a single full payment.
This agreement is signed after a successful negotiation with the creditor to trim down the percentage of the interest in substitute of a full payment. If the creditor agrees on the condition the next step, the written contract is made. For writing a debt settlement agreement sample, a large number of templates are available online that are customizable and printable. These templates usually include all the most important section for a contract.
A debt settlement agreement contains the following major sections.
- The starting section that consists of the names of the debtor and the creditor, the amount of the loan and the amount of interest or any late payment fee that becomes the reason for a debt settlement agreement.
- The statement of angriness of both the creditor and debtor for the settlement of the debt. This section will also include the condition on which debt is settled, usually the reduction in the amount of payment.
- In the ending section both the parties should place their signature along with name and date.
Create your own Debt Settlement Agreement by using the following template,