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Debt Settlement Agreement Template

Prepared for:

[Client.FirstName][Client.LastName]
[Client.Company]

Created by:

[Sender.FirstName][Sender.LastName]
[Sender.Company]

Dear [Client.FirstName],

Congratulations, you are on your way to settling your debt with [Sender.Company]. Our team is here to support you and as you work toward paying down your account with us. Please read the terms and conditions of the agreement below and sign electronically. 

After we receive your signed documents, someone from our team will also sign, and the finalized printable PDF document is sent to the email address we have on file for you. If you need to contact us regarding your payment plan or to update any of your contact information, please give us a call at [Sender.PhoneNumber] or email us at [Sender.Email]

This Debt Settlement Agreement (the “Agreement”) states the terms and conditions that govern the contractual agreement between [Client.Company] having its principal place of business at [Address] (the “Debtor”), and [Sender.Company] having its principal place of business at [Address] (the “Creditor”) who agrees to be bound by this Agreement as of the effective date. 

WHEREAS, the Debtor is indebted to the Creditor in the amount of [Number] dollars ($[Numerical.Amount]) (the “Debt”); and

WHEREAS, the Debtor wishes to settle the Debt in full according to the terms of this Debt Settlement Agreement.

NOW, THEREFORE, In consideration of the mutual covenants and promises made by the parties hereto, the Debtor and the Creditor (individually, each a “Party” and collectively, the “Parties”) covenant and agree as follows:

Acknowledgment of debt. The Debtor agrees and acknowledges that it is indebted to the Creditor in the full amount of the Debt.

Settlement amount. The Creditor agrees to accept from the Debtor, a total final payment amount of [Number] Dollars ($[Numerical.Amount]) as full repayment of the outstanding Debt to the Creditor at the date hereof, subject to the terms and conditions of this Agreement. Payments shall be made according to the payment schedule outlined in the section below titled “Terms of Payment.” 

Timeliness. The Parties agree and acknowledge that time is of the essence with regard to the Debt Settlement Payments. This applies to signing the Agreement and to making the payments according to the Agreement. If the Debtor does not sign the Agreement within ten (10) business days of receiving it, the Creditor may rescind the offer. 

If the Debtor fails to make a payment as outlined in the terms of this agreement without communicating with the Creditor in advance, the Creditor may void the Agreement if they choose. Voiding the contract means that the settlement amount is no longer valid, and the Debtor owes the full debt to the Creditor. It is at the sole discretion of the Creditor whether or not they void the Agreement if there is a breach of contract.

No modification unless in writing. No amendments are made to this Agreement unless completed in writing and agreed upon by both Parties. If both Parties cannot come to an agreement on amending the terms, then the Agreement should be carried out as it was originally written and signed. 

Full integration. This Debt Settlement Agreement supersedes any prior agreements, understandings, or negotiations, whether written or oral. In other words, this agreement is now the controlling agreement with regard to the Debt. In the event that the terms of this agreement are different from any other documents signed previously, the terms of this agreement are the ones that will be used.

Force majeure. The Parties shall make any further assurances as may be necessary to implement and carry out the intent of this Agreement. In other words, if needed, the Debtor and the Creditor will take additional actions in order to ensure that the Debt will be settled so long as the terms of this agreement are followed.‌

Conditions. If there are any conditions that affect the Agreement, they should be outlined as part of the terms. Examples of conditions that may vary include enrollment fees, monthly account maintenance fees, or late payment fees. 

Governance. This Debt Settlement Agreement and the interpretation of the terms herein shall be interpreted in accordance with the governing laws of the State of [State]. The Parties irrevocably submit to the exclusive jurisdiction of the federal and state courts located in [County] County, [State].

You may have Debtors across many states. For ease of managing your portfolio of debt settlement contracts, list the same state on all of your agreements. This ensures that you have an opportunity to study and anticipate the interpretation of laws and write the Agreement so that it is in line with your state’s expectations for financial matters.

Communication. Both Parties are expected to maintain communication, especially in the case of any changes that affect the Agreement. This includes changes like the contact person at the Creditor Company or the phone, email, or physical address of the Debtor. 

Don’t assume that the Debtor knows they should update their contact information with you. If you send correspondence regarding this Agreement to the wrong address, there may be a miscommunication about expectations between the Creditor and the Debtor.

Warranties. The Creditor agrees to accept the settlement amount as payment in full for the account(s) in question. The Creditor will not sell the debt to a third-party collection agency as long as the Agreement is active and once it is considered complete. 

Release terms. The Creditor agrees that once the Agreement is fulfilled, they will no longer pursue the original amount debt in full as agreed in the initial credit or loan agreement. While the Creditor may maintain records of the past account statuses for future reference, the Debtor is considered to be in good standing with the Creditor company. 

The Debtor agrees that they will not take any legal action against the Creditor following the completion of the Agreement. The one exception to this rule is if the Creditor breaches the contract in some way. For example, the Creditor may sell off the balance of debt owed outside of the settlement to a third party, which is in violation of the terms of this Agreement.  

Severability. The terms of this agreement are accepted as a whole. If, for some reason, either party cannot carry out one part of the Agreement, the rest of the Agreement should be carried out as expected. Similarly, if either party pursues legal action to void one part of the Agreement, and a court of law invalidates one section, it doesn’t void the entire Agreement. 

Summary of Debt Owed

 DebtAccount NumberAmount OwedSettlement Amount


There is a chance that the Debtor has multiple accounts with the Creditor. It is important to be clear about which debt(s) are part of this agreement. If you are consolidating multiple debts, be sure to summarize the details of each individual account.

Terms of Payment‌

The Terms of Payment for this Agreement apply to the debt(s) outlined in the above section titled “Summary of Debt Owed.” Payment terms apply to the debt(s) as a whole. The total of all debts owed by the Debtor to the Creditor is [NUMBER] dollars ($Numerical.Amount). The Creditor agrees to settle this debt for the amount of [NUMBER] dollars ($Numerical.Amount) if the Debtor follows the outlined payment schedule below. 

The Debtor has the option to pay the debt in a single lump sum, which may result in a lower settlement amount than if the Debtor spreads the payment out over a period of months. The Creditor offers the Debtor the opportunity to set up automatic payments via ACH transfer from your bank account or using your debit card. Credit cards are not accepted as a form of payment in settling this debt. Alternately, the Debtor can call monthly and may make a payment manually over the phone with a representative from Sender.Company. 

If an automatic payment is declined for any reason, or if the Debtor is late making a payment, it is the responsibility of the Debtor to contact the Creditor within three (3) business days to make the payment. On the fourth (4th) business day, the Debtor may incur a late fee as outlined in the “Conditions” section of the Agreement. Missing a payment by more than three (3) business days may be grounds for voiding the Agreement in its entirety. 

IN WITNESS WHEREOF, each of the Parties has executed this Debt Settlement Agreement, both Parties by its duly authorized officer, as of the day and year set forth below.

[Sender.Company]

Signature

MM/DD/YYYY

[Sender.FirstName][Sender.LastName]

[Client.Company]

Signature

MM/DD/YYYY

[Client.FirstName][Client.LastName]

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