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Debt Settlement Agreement

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Debt Settlement Agreement Powered By Docstoc
					This Debt Settlement Agreement is used when a debtor is unable to pay back a
principal loan amount to a lender. Under this agreement, the parties agree to a lesser
amount as satisfaction of the debt. It can save the lender the time and effort of retaining
a collecting agency and guarantees at least partial repayment of the original loan. This
document contains the material terms and conditions of the agreement including the
principal loan amount, the settlement amount, payment details, and release and
discharge of the principal debt. It may be customized to fit the specific needs of the
contracting parties. Debtors and lenders should use this document when reaching a
settlement.
                          DEBT SETTLEMENT AGREEMENT

       This Debt Settlement Agreement (this “Agreement”) is hereby made and entered into on
this _______________ day of __________________, 20_______ (the “Effective Date”) by and
between          ___________________________________               (“Lender”)           and
_____________________________ (“Debtor”).

                                                RECITALS

      WHEREAS, Lender and Debtor are parties to a certain Loan Agreement dated the
_______________ day of __________________, 20_______ _____________ (the “Loan
Agreement”), a copy of which is attached to this Agreement as Exhibit “A;”

       WHEREAS, pursuant to the Loan Agreement, Debtor is indebted to Lender for the
principal amount of ____________ dollars ($___), plus all accrued and unpaid interest at the rate
of __________ percent (__%) per annum, totaling ___________ dollars ($____) (the “Debt”);
and

        WHEREAS, Debtor and Lender desire to resolve the Debt and to fully and finally settle
and release any and all disputes, debts, claims, demands, obligations, liabilities, and cause of
actions between the parties to this Agreement.

        NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the receipt and adequacy of which is hereby acknowledged, Lender and Debtor agree as
follows:

                                                        TERMS

1.       ACKNOWLEDGEMENT OF DEBT

       Lender and Debtor hereby acknowledge and agree that Debtor is, at the date hereof,
indebted to Lender for Debt, and that the Debt constitutes the entire amount of indebtedness
owing to the Lender.

2.       SETTLEMENT AMOUNT

        As repayment in full of the Debt, Debtor agrees to pay the Lender _____________
dollars ($____), by way of check or cash, and Lender agrees to accept same as full payment of
the Debt, subject to the following repayment terms and provisions:

         a.        The Debt shall be paid in full on __________________________ (the “Due
Date”)

[or]


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       b.       The outstanding Principal Amount is due and payable in __________ (___)
consecutive monthly installments, each in the amount of _________ dollars ($_____), payable
on the first day of every month, and the balance of the Principal Amount shall become due and
payable to Lender on ______________.

3.       RELEASE BY LENDER

        Upon payment of the full Debt to the Lender, the Debt will be deemed to have been
repaid in full by Debtor and Lender hereby agrees to fully and forever release and discharge
Debtor and any of its heirs, affiliates, executors, successors, and assigns from any and all actions,
suits, cause of actions, debts, covenants, agreements, promises, judgments, executions, claims,
and demands whatsoever in law or in equity, whether known or unknown, which Lender ever
had, has, or could have against Debtor in connection with the Debt.

4.       RELEASE BY DEBTOR

        Upon payment of the full Debt to Lender, Debtor hereby agrees to fully and forever
release and discharge Debtor and any of its heirs, affiliates, executors, successors, and assigns
from any and all actions, suits, cause of actions, debts, covenants, agreements, promises,
judgments, executions, claims and demands whatsoever in law or in equity, whether known or
unknown, which Debtor ever had, has, or could have against Lender in connection with the Debt.

5.       FAILURE TO PAY

        Time is considered to be of the essence in this Agreement, and if Debtor fails to pay the
Debt as provided herein, this Agreement will be immediately terminated and the original
Principal Amount, and all accrued interest thereon, shall continue to be due with immediate
effect.

6.       BINDING EFFECT

        This Agreement shall be binding upon and inure to the benefit of the parties and their
respective heirs, successors, and assigns permitted under this section.

7.       AMENDMENT

       This Agreement may not be amended except by an instrument in writing, executed by
authorized representatives of both parties.

8.       GOVERNING LAW

        Any controversy arising under this Agreement and the rights and obligations established
herein, shall be governed by the laws of the State of _____________.




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9.       NOTICES

        All notices provided for in this Agreement shall be given in writing and shall be effective
when either served by hand delivery, electronic facsimile transmission, express overnight courier
service or by registered or certified 
				
DOCUMENT INFO
Description: This Debt Settlement Agreement is used when a debtor is unable to pay back a principal loan amount to a lender. Under this agreement, the parties agree to a lesser amount as satisfaction of the debt. It can save the lender the time and effort of retaining a collecting agency and guarantees at least partial repayment of the original loan. This document contains the material terms and conditions of the agreement including the principal loan amount, the settlement amount, payment details, and release and discharge of the principal debt. It may be customized to fit the specific needs of the contracting parties. Debtors and lenders should use this document when reaching a settlement.
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