Debt Compromise Contract

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					Debt Compromise Contract
This Debt Compromise Contract is between a debtor and lender to an existing debt or
loan. Under this agreement, the debtor acknowledges that they are unable to pay the
full amount of the debt, and the lender agrees to take a lesser amount as full satisfaction
of the debt. This may say the lender time in money by foregoing collections. Simply
enter your information in the yellow highlighted fields, delete the bolded instructions, and
you’ll have a customized agreement that will save both parties’ money and time.
                               DEBT COMPROMISE CONTRACT

THIS DEBT COMPROMISE CONTRACT (this “Agreement”) is hereby made and entered
into this ___ day of ____________, 20___ [Instruction: insert date] (the “Effective Date”) by
and between ___________________________________ [Instruction: insert the name of
Lender] (“Lender”) whose offices are located at _________________________________
[Instruction: insert address] and ___________________________________ [Instruction:
insert the name of Debtor] (“Debtor”) whose offices are located at
_______________________________ [Instruction: insert address], hereinafter collectively
referred to as the “Parties.”

WHEREAS, Lender and Debtor are parties to a certain _____________________ [Instruction:
loan agreement or promissory note] made as of the ____ day of ____________, _____
[Instruction: insert date] (the “Loan Agreement”) a copy of which is attached hereto as
Schedule “A;”

WHEREAS, Debtor is indebted to Lender for the principal amount owing under the Loan
Agreement in the amount of _________________ dollars ($______) [Instruction: insert dollar
amount] plus all accrued and unpaid interest at the rate of _____ percent (___ %) [Instruction:
insert number], together totaling ____________ dollars ($_________) [Instruction: insert
dollar amount] (the “Principal Amount”); and

WHEREAS, the Parties hereby desire to cancel the Loan Agreement made between them and
settle and release all outstanding debts, obligations, and liabilities with respect thereto, and all
accrued and unpaid interest, subject to the terms and conditions of this Agreement.

NOW, THEREFORE, THIS AGREEMENT WITNESSES, that for good and valuable
consideration of the mutual covenants and agreements contained herein, the receipt and
adequacy of which is hereby acknowledged, Lender and Debtor covenant and agree as follows:

I.       ACKNOWLEDGEMENT OF DEBT

1.01 The Parties hereby acknowledge and agree that Debtor is, at the date hereof, indebted to
Lender for the Principal Amount, and that the Principal Amount outstanding to Lender
constitutes the entire amount of indebtedness owing to Lender.

II.      SETTLEMENT AMOUNT

2.01 Lender hereby agrees to accept from Debtor, the payment amount of ______________
dollars ($___________) [Instruction: insert dollar amount] as full repayment of the Principal
Amount outstanding to Lender at the date hereof, subject to the repayment terms and provisions
as follows:

The Principal Amount outstanding hereto agreed to by the Parties, is due and payable in full. to
Lender, by way of certified check, bank draft, or money order on the ____ day of
________________, 20____. [Instruction: insert date].


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[or]

The Principal Amount outstanding hereto agreed to by the Parties, is due and payable in
________________ (___)[Instruction: insert number] consecutive monthly installments, each
in the amount of _______________ dollars ($__________) [Instruction: insert dollar amount],
payable on the _____ [Instruction: insert number] day of each and every month, up to and
including the _____ day of __________, 20____ [Instruction: insert date], and the balance of
the said Principal Amount outstanding shall become due and payable in full to Lender on the
____ day of ____________, 20____ [Instruction: insert date].

2.02 In consideration of payment of the full Principal Amount outstanding owed to Lender in
accordance with the terms and provisions provided for herein, Lender hereby agrees to fully and
forever remise, release, and discharge Debtor and any of its affiliates, executors, successors, or
assigns, from any and all actions, causes of action, suits, debts, dues, sums of money, accounts,
bills, covenants, contracts, agreements, promises, judgments, executions, claims, and demands,
whatsoever in law or equity under provincial, federal, or state laws, whether known or unknown,
which Lender had, has, or could have had against Debtor in connection with the Principal
Amount outstanding to Lender, but Lender does not release Debtor from any breach of this
Agreement.

2.03 In consideration of payment of the full Principal Amount outstanding to Lender in
accordance with the terms and provisions provided for herein, Debtor hereby agrees to fully and
forever remise, release, and discharge Lender and any of its affiliates, executors, successors, or
assigns, from any and all actions, causes of action, suits, debts, dues, sums of money, accounts,
bills, covenants, contracts, agreements, promises, judgments, executions, claims, and demands,
whatsoever in law or equity under provincial, federal, or state laws, whether known or unknown,
which Debtor ever had, has, or could have against Lender in connection with regard to the
Principal Amount outstanding to Lender.

III.     DEFINITIONS

3.01 “Business Day” means any day, other than a Saturday or Sunday or any other day on
which financial institutions are generally not open for business during normal banking hours.

3.02     “Parties” means Lender and Debtor, or any one of them.

3.03 “Person” includes an individual, a company, a joint venture, a partnership, a trust, a
trustee, or an unincorporated organization; “Persons” shall have a similar meaning.

3.04 “Affiliate” means, with respect to any Person, any other Person who is directly or
indirectly controlled by or under the direct or indirect common control with, such Person, and
without limiting the foregoing, shall include any Person in like relation to an Affiliate. A Person
shall be deemed to control another Person if such Person possesses, directly or indirectly, the
power to direct or cause the direction or management of the policies of such Person, whether




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through the ownership of voting securities, by contract, or otherwise; the term “controlled” shall
have the similar meaning.
IV.    RIGHTS OF ENFORCEMENT

4.01 If any covenant or provision of this Agreement is determined to be invalid, void, or
unenforceable, in whole or in part, such determination shall in no way affect the validity or
enforceability of any other covenant or provision of this Agreement, each of which is hereby
declared to be a separate and distinct covenant severable from each of the others for the purposes
of this Agreement. If a court of competent jurisdiction would otherwise adjudge, declare, or
decree all or any portion of the covenants and provisions set forth in this to be void and
unenforceable, the invalid or unenforceable portions hereof shall, automatically and without
further act on the part of the Parties, be reduced in scope, geographical scope, or duration of time
to such extent that such court would hold same to be enforceable, but only with the regard to
those matters before such court.

V.       EQUITABLE RELIEF

5.01 The Parties hereby recognize and agree that, in the event of a breach of this Agreement
by either or both of Lender and Debtor, Lender would suffer immediate and irreparable harm and
damage as a result of such breach and remedies at law for such breach would be inadequate.
Accordingly, the Parties agree that in the event of a breach of this Agreement by either or both of
the Parties or any of their respective Affiliates, Lender, in addition to such other remedies as may
be available at law, in equity, or as provided by this Agreement, shall be entitled to injunctive
relief (both temporary and permanent) and enforcement of such rights by an action for specific
performance. Debtor agrees to pay to Lender all profits of any type received by Debtor or its
respective Affiliates in connection with the activities found to be in violation of this Agreement.

VI.      DISPUTE RESOLUTION

6.01 The Parties hereby agree that any disputes or disagreements respecting the negotiation,
performance, or interpretation of this Agreement, shall be resolved as follows:

         A.      Lender and Debtor shall attempt to resolve any dispute by dealing with each other
         directly; and

         B.      In the event that the Parties cannot resolve the dispute within _____ (__) days of the
         date upon which the dispute arose, each Party shall, within _____ (__) days thereafter,
         appoint an arbitrator, and the two arbitrators so appointed will, within _____ (__) days of
         their appointment, agree upon the appointment of a third arbitrator. If either Party fails to
         appoint an arbitrator within the _____ (__) day time limit, that Party shall be deemed to
         have forfeited its right to appoint an arbitrator, and the arbitrator appointed by the other
         Party shall appoint one other arbitrator, and both of those arbitrators shall agree upon the
         appointment of a third arbitrator. Once all three arbitrators have been appointed, the dispute
         shall be presented thereto by the Parties at the earliest time or times designated by the
         arbitrators, and the three arbitrators shall resolve the dispute on the basis of a majority
         decision. Any such decision of the arbitrators shall be final and binding upon the Parties,



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         and the Parties shall have no further right of appeal to any other party, body, authority, or
         court.
VII.     NOTICE

7.01 Every notice provided for in this Agreement shall be written and directed to the Party to
whom notices are delivered or given and shall be delivered or given at the following addresses:

If to Lender:

_____________________________ [Instruction: insert address of Lender]
Fax: (_____) __________________ [Instruction: insert fax number of Lender]
Attention: ____________________ [Instruction: insert name of person whose attention the
correspondence should be addressed]

If to Debtor:

____________________________ [Instruction: insert address of Debtor]
Fax: (_____) _________________ [Instruction: insert fax number of Debtor]
Attention: ____________________ [Instruction: insert name of person whose attention the
correspondence should be addressed]

Each notice shall be personally delivered or sent via U.S. Postal Service, UPS, FedEx, DHL, or
by facsimile. Any notice personally delivered shall be deemed received on the date on which it
was personally delivered, provided that if such notice has not been delivered on a business day, it
shall be deemed received on the next business day thereafter. Any notice sent via U.S. Postal
Service, UPS, FedEx, or DHL shall be deemed received on the date on which verifiable delivery
is made. Any notice sent by facsimile shall be deemed received on the date on which it was
transmitted, provided that if such notice has not been transmitted on a business day, it shall be
deemed received on the next business day thereafter. The Parties each may change their address
for the purposes of this section from time to time by giving written notice of such change to the
other Party in accordance with this section.

VIII. SUCCESSORS AND ASSIGNS

8.01 This Agreement shall be binding upon and shall enure to the benefit of the Parties hereto
and to their respective heirs, executors, administrators, successors, and lawful assigns except that
none of the Parties hereto may assign this Agreement or any of their rights and obligations
hereunder unless the prior written consent of the other Party hereto is first obtained.

IX.      GOVERNING LAW

9.01 This Agreement shall be governed by and construed in accordance with the laws of the
State of _________________________ [Instruction: insert applicable state]. Any action, suit,
or proceeding arising out of or relating hereto shall be brought in the County of
_______________ [Instruction: insert applicable county], State of _______________




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[Instruction: insert applicable state], and each of the Parties hereto hereby irrevocably submits
to the jurisdiction of any such courts for the purpose of any such action, suit, or proceeding.

X.       CONFIDENTIALITY

10.01 Neither Party shall make any public announcement concerning the instant transaction or
related negotiations without the other Party’s prior written approval (which approval may not be
unreasonably withheld or delayed), except as may be required by applicable law. If such an
announcement is required by law, the Party required to make the announcement shall inform the
other Party of the contents of the announcement proposed to be made and the proposed date of
the announcement and shall use its reasonable efforts to obtain the other Party’s approval for the
announcement, which approval must not be unreasonably withheld or delayed. Except as may be
required by applicable law, in no event shall any announcement be made until this Agreement
has been signed by all Parties and the transactions contemplated herein are concluded.

XI.      ENTIRE AGREEMENT

11.01 This Agreement, and any schedules attached hereto, constitutes the entire agreement
between the Parties in respect of the subject matter herein, and supersedes all previous
negotiations, understandings, and agreements, verbal or written, with respect to any matters
referred to herein. No amendment, change, qualification, waiver, cancellation, or termination of
this Agreement shall be effective or binding unless executed in writing by the Party to be bound
thereby. The failure at any time of any Party to insist upon strict performance of any provision
of this Agreement shall not limit the ability of that Party to insist upon the performance of the
same or any other provision at any future time whatsoever (except insofar as that Party may have
given a valid and effective waiver and release).

XII.     COUNTERPARTS

12.01 This Agreement may be executed in any number of counterparts, and by facsimile, each
of which shall be considered an original and all of which taken together shall constitute one and
the same instrument.

IN WITNESS WHEREOF the Parties have executed this Agreement as of the day and year first
written above.



                                                                 ______________________ [Instruction:
                                                                 insert the name of Debtor]

                                                                 ______________________ [Instruction:
                                                                 insert the name of Lender]

                                                                 Name:
                                                                 Title




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                                                 SCHEDULE “A”

                                             LOAN AGREEMENT




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DOCUMENT INFO
Description: This Debt Compromise Contract is between a debtor and lender to an existing debt or loan. Under this agreement, the debtor acknowledges that they are unable to pay the full amount of the debt, and the lender agrees to take a lesser amount as full satisfaction of the debt. This may say the lender time in money by foregoing collections. Simply enter your information in the yellow highlighted fields, delete the bolded instructions, and you’ll have a customized agreement that will save both parties’ money and time.
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