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Fillable Form Debt Settlement Agreement

Debt Settlement Agreement is used to confirm in writing the details discussed by a creditor and a debtor to settle a debt. It is usually used when an individual wants to make a final payment for a debt.

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What is a Debt Settlement Agreement?

A Debt Settlement Agreement is a contract signed between a creditor and a debtor where the debtor agrees to pay the total remaining balance of the debt that he or she owed to the creditor. This agreement occurs when a debtor wants to settle his final payment and usually pays between 50% to 70% of the outstanding due or whenever the full payment can be made. Certain terms are also constructed in a debt settlement agreement by both parties.

What is the purpose of a Debt Settlement Agreement?

The objective of a Debt Settlement Agreement arranges the financial stability of the debtor to pay the amount owed to the creditor in a much easier way rather than leaving the debtor a pile of debts and interest as he or she can no longer pay the owed money. This settlement helps both parties to fulfill each other’s need for collecting and returning what is borrowed.

The agreement also notes the terms and provisions that the creditor and debtor have recognized for settling the last or final payment. Both parties must follow the precepts they made upon this arrangement to avoid further conflicts and legal punishments.


What are the benefits of a Debt Settlement Agreement?

  1. You have the probability to pay less if the creditor agrees to your settlement intention.

  1. Your credit score standing is amendable for missed payments.

  1. It can help you avoid bankruptcy and debts.

  1. Legal penalties are less likely to be taken into account.

  1. It can prevent the seizure of properties and possessions.

  1. It can mend your financial worries or stress.

What are the risks of a Debt Settlement Agreement?

You see that there are a lot of advantages in a Debt Settlement Agreement. However, there are also risks that you might want to know before you make a settlement and prepare for the possible repercussions.

1. Debt Settlement. A debt settlement company has no firm assurance of achieving a successful arrangement with the creditor of the debtor.

2. Rightful claims. This happens during the fulfillment of debt payments to a debt settlement company and not the debtor’s creditor. Hence, the creditor could possibly take legal action.

3. Credit Score. A Debt Settlement Agreement could be detrimental to the debtor’s credit score when not paid properly because the debts are shown on his or her credit report.

4. Interest. The debtor could end up paying more than the agreed payment for settlement if it fails to accommodate the payment, however, interest will be added on top of the initial agreed payment.

Types of eligible debts

Before you dive into a Debt Settlement Agreement, you must consider what type of debt you have and identify if the settlement is the right choice for you.

UNSECURED DEBT

This type of debt does not hold any property or possession secured that can be used against it. The creditor won’t be able to collect what you own if you can’t pay the debt in the meantime and are on the verge of bankruptcy.

Here are the common types of unsecured debt:

  • Credit cards
  • Signature loans
  • Medical bills
  • Store cards
  • Gym memberships
  • Other unsecured lines of credit

SECURED DEBT

These are debts that have a secured property or asset that can be seized by a creditor. For instance that your property has been taken into their possession and you still owe them, you might consider a settlement.

Here are the common types of secured debt:

  • Mortgages
  • Car loans
  • Secured personal loans
  • Government loans
  • Tax/IRS debt

Whether you are qualified for a Debt Settlement Agreement or not, you can still settle a debt if you are having trouble with your finances.


How to fill out a Debt Settlement Agreement?

CREDITOR’S NAME

Enter the creditor’s full name.

ADDRESS

Enter the creditor’s address starting with a street number, street name, city, and state.

DEBTOR’S NAME

Enter the debtor’s full name.

ADDRESS

Enter the debtor’s address starting with a street number, street name, city, and state.

1. EFFECTIVE DATE

Supply the date when both parties agreed on the Debt Settlement Agreement.

2. PRESENT DEBT

Provide the current amount due owed by the debtor, known as the present debt.

3. SETTLEMENT DEBT

Enter the amount of the last payment (present debt) that the debtor wants to settle.

4. PAYMENT

Mark where you want to get the last payment made in the following:

  • Check
  • Bank Wire
  • Certified Check
  • Cash
  • Other (specify)

Then, enter the month, day, and year for making the payment.

5. CREDITOR’S DUTY

The creditor has the authority to remove or delete any entries from the debtor that are harmful to the credit report if the claims are proven.

6. BINDING EFFECT

The Debt Settlement Agreement will also bind the successors or assignees of both parties.

7. HELD HARMLESS

The creditor and debtor agreed that they shall not bring any claim against the other party in relation to the Present Debt.

8. CONFIDENTIALITY

All parties must maintain the confidentiality of the Debt Settlement Agreement. If in case the agreement were publicized, the involved party is responsible for the damages made and will be liable for such violations.

9. MODIFICATION

Changes to any procurements in a Debt Settlement Agreement shall not be compromised unless both parties agreed to make modifications in a formal letter with their sign.

10. SEVERABILITY

The remaining contract’s provisions, parts, or expressions under this agreement shall remain effective regardless of any terms or provisions found to be unenforceable.

11. THIRD PARTIES

Only the creditor and the debtor agreed that their debt transaction will only involve themselves and not any third party or entity.

12. GOVERNING LAW

Enter the state to identify the laws that would govern this agreement. .

SIGNATURE

Before signing the Debt Settlement Agreement, you must acknowledge and understand the legal consequences if you fail to follow the mandated terms.

DEBTOR’S SIGNATURE

Enter the name of the debtor and sign and date the agreement.

CREDITOR’S SIGNATURE

Enter the name of the creditor and sign and date the agreement.




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