Everything You Should Know About Writing a Debt Settlement Agreement
Once you realize that you have too much debt you can’t cope with, you should consider signing a debt settlement agreement and renegotiate the deal with your creditor. If you want to learn more about this contract and find out what it should contain, our guide will answer all your questions. We will also share some extra tips on writing many other legal documents in a snap without inaccurate and outdated templates!
Definition of the Debt Settlement Agreement
A debt settlement agreement is a contract between a lender and a borrower that enables the parties to compromise on outstanding debt. The creditor allows the debtor to pay an amount smaller than the outstanding amount—between 50% and 70%—if they can’t pay off the entire remaining sum at once. With this contract, the parties determine the terms of the settlement, minimizing confusion by clearly explaining what each party must do and what rules they have to follow.
Benefits and Drawbacks of Debt Settlement Agreements
The following table shows some advantages and disadvantages of signing a debt settlement contract:
What Does a Proper Debt Settlement Contract Consist Of?
To create a valid debt settlement contract, you must ensure that your document is well-structured and that it contains the relevant information. The clearer the contract, the less likely it is that there may be any misunderstandings. Below is the table highlighting the recommended scheme according to which you can write your agreement:
|Other important clauses||
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- What makes an agreement legally binding?
- What are the key elements of a basic rental agreement?
- What are the costs of creating a valid prenuptial agreement?
- What are contracts of deed, and what are their advantages and disadvantages?
- What is the difference between a regular child support agreement and a child support agreement outside of court?
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