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What is a Debt Settlement Agreement?
It's not always easy to collect on an outstanding loan, and sometimes your debtor won't be able to pay you in full. This Debt Settlement Letter can help you recoup some of your losses. By putting new terms in writing, our Debt Settlement Agreement can help you get partially repaid so you can move on to other things.
A Debt Settlement Agreement is used when a debtor is unable to pay back money borrowed in full. Instead of wasting time and money chasing down a debtor, you can reach an agreement as to how much a debtor can pay you. With this settlement letter sample, you define the amount original amount owed and the new settlement amount to be paid. Other terms include the date by which payment will be made and how the debtor will make payment. If the debtor fails to make timely payment, then the total amount of the debt becomes due. Optional sections in this Debt Settlement Agreement include confidentiality and liability clauses.
When to use a Debt Settlement Agreement:
You are a creditor or debtor who has agreed to settle a debt and need to document the terms of that settlement.
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Sample Debt Settlement Agreement
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DEBT SETTLEMENT AGREEMENT
This Debt Settlement Agreement (the "Agreement") is entered into as of . The parties to this Agreement are as follows:
The Creditor and Debtor(s) agree to negotiate and settle the debt under the following terms and conditions. also declares that he/she is authorized to act as an agent of the Creditor.
The Creditor and Debtor(s) agree that the current outstanding debt is . All parties agree that the Creditor will accept a wire transfer check cash payment of toward settlement of the debt in full. The Creditor agree to compromise the debt under the condition that they will receive the payment by .
If the Debtor(s) fail to send in the amount agreed by , the Creditor shall immediately demand the payment of the original amount owed by the Debtor(s).
This Agreement for debt settlement shall be binding upon the Creditor, Debtor(s) and their successors and assignees.
WAIVER OF CALIFORNIA CIVIL CODE, SECTION 1542. The foregoing release extends to all claims whether or not claimed or suspected and constitutes a waiver of each and all the provisions of the California Civil Code, Section 1542 (to the extent it would be applicable), which reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR(S) DO NOT KNOW OR SUSPECT TO EXIST IN THEIR FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY THEM MUST HAVE MATERIALLY AFFECTED THEIR SETTLEMENT WITH THE DEBTOR(S).
RELEASORS HAVE READ AND UNDERSTOOD THE FOREGOING AND INDICATE THAT FACT BY PLACING THEIR INITIALS, OR THE INITIALS OF AN AUTHORIZED AGENT, BELOW:
RELEASORS, AND EACH OF THEM, UNDERSTAND AND ACKNOWLEDGE THAT THE SIGNIFICANCE AND CONSEQUENCE OF THIS WAIVER OF CALIFORNIA CIVIL CODE, SECTION 1542, IS THAT EVEN IF THEY SHOULD EVENTUALLY SUFFER ADDITIONAL DAMAGES ARISING OUT OF THE FACTS REFERRED TO ABOVE, THEY WILL NOT BE ABLE TO MAKE ANY CLAIM FOR THOSE DAMAGES. FURTHERMORE, RELEASORS, AND EACH OF THEM, ACKNOWLEDGE THAT THEY WILL NOT BE ABLE TO MAKE ANY CLAIM FOR DAMAGES EVEN AS TO CLAIMS FOR DAMAGES THAT MAY EXIST AS OF THE DATE OF THIS RELEASE BUT WHICH THEY DO NOT KNOW EXIST, AND WHICH, IF KNOWN, WOULD MATERIALLY AFFECT THEIR DECISIONS TO EXECUTE THIS AGREEMENT, REGARDLESS OF WHETHER THEIR LACK OF KNOWLEDGE IS THE RESULT OF IGNORANCE, OVERSIGHT, ERROR, NEGLIGENCE, OR ANY OTHER CAUSE. RELEASORS COVENANT AND AGREE THAT THEY WILL FOREVER REFRAIN AND FOREBEAR FROM BRINGING, COMMENCING OR PROSECUTING ANY AND ALL ACTIONS, LAWSUITS, CLAIMS OR PROCEEDINGS WITH RESPECT TO ANY MATTER THAT HAS BEEN RELEASED HEREIN. FURTHER, IT IS EXPRESSLY UNDERSTOOD AND AGREED BY RELEASORS, THAT THE FACTS WITH RESPECT TO WHICH THIS AGREEMENT IS GIVEN MAY HEREINAFTER TURN OUT TO BE OTHER THAN OR DIFFERENT FROM THE FACTS IN THAT CONNECTION NOW KNOWN OR BELIEVED BY SAID PARTY TO BE TRUE, AND SAID PARTY EXPRESSLY ASSUMES A RISK OF THE FACTS TURNING OUT TO BE SO DIFFERENT, AND AGREES THAT THIS AGREEMENT SHALL BE IN ALL RESPECTS EFFECTIVE AND NOT SUBJECT TO TERMINATION OR RESCISSION BY REASON OF ANY DIFFERENCE IN THE FACTS.
All settlement terms herein are dependent upon receipt of final payment by way of wire transfer check cash in the amount of to the Creditor's account.
No modification to any provisions contained in this Agreement shall be binding upon any party unless made in writing and signed by all parties.
If any provision of this Agreement is held to be unenforceable for any reason, the remaining parts of the Agreement shall remain in full force and effect.
Each party represents he/she/it has not assigned any portion of the claims released under this Agreement to any third party.
This Agreement shall be construed in accordance with law.
This Agreement constitutes a single, integrated written contract expressing the entire agreement of the parties to this Agreement. Any other agreements, discussions, promises, and representations have been and are integrated into and superseded by this Agreement.
Each party represents he/she/it has authority to enter into this Agreement on behalf of him/her/itself or his/her/its respective organization.
, on behalf of
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___Sign this document. This document needs to be signed by all of the Debtors and the Creditor named in the agreement.
The Agreement can be signed online. It becomes effective as of the date specified in the Agreement.
___Everyone gets a copy. Anyone named in the document should receive a copy of the signed document. If you sign this agreement online a copy will be securely stored in your account. You can share your document from your account.
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