This debt settlement agreement is between , an individual a(n) (the "Creditor"), and , an individual a(n) (the "Debtor").

The Creditor and the Debtor are parties to a loan agreement promissory note dated (the "Original Agreement"), a copy of which is attached to this agreement as Exhibit A.

Under the Original Agreement, the Creditor loaned the original principal amount of $ to the Debtor. To date, the Debtor has made payments to the Creditor totaling $. The Debtor currently owes the Creditor $, which is the original amount, less payments made, plus accrued interest of $ (the "Outstanding Debt").

The Outstanding Debt constitutes the entire outstanding indebtedness of the Debtor to the Creditor as of the effective date of this agreement, including principal, interest to the date of this agreement, and costs.

The parties wish to resolve the dispute between them and to settle the subject matter of the dispute and all claims that could be made in connection with it, with no party admitting any liability to the other party, except for the obligations in this agreement.

The parties therefore agree as follows:


  • (a) Settlement Amount. As repayment in full of the Outstanding Debt, the Debtor shall pay $ to the Creditor (the "Settlement Amount").
  • (b) Payment Details. The Debtor shall pay the Settlement Amount as a lump-sum payment on .
  • (b) Payment Details. The Debtor shall pay the Settlement Amount as a monthly payment of $ on the day of each following month, for months.


  • (a) Credit Reporting Agencies. After full payment of the Settlement Amount, the Creditor shall notify the three major credit bureaus (Equifax, Experian, and TransUnion) that the Debtor's account has been paid as agreed and instruct them to delete any negative listings relating to this account.
  • (b) Discharge. The Creditor's acceptance of the Settlement Amount serves as a complete discharge of the Outstanding Debt, and the Creditor will then release the Debtor of all claims, whether known or unknown, foreseen or unforeseen, that the Creditor has against the Debtor in connection with the Outstanding Debt, but does not release the Debtor from claims arising from a breach of this agreement.
  • (c) Failure to Pay. This agreement is expressly conditioned on the Settlement Amount being paid to the Creditor in full no later than . If the Debtor does not pay the Settlement Amount by , the Outstanding Debt owed by the Debtor will be reinstated in full and be immediately due.


The Creditor states that:

  • (a) it has not transferred or assigned any portion of the Outstanding Debt to a third party, and no third party has any right to payment of all or any part of the Outstanding Debt; and
  • (b) it has no claims or potential claims against the Debtor except the Outstanding Debt.

The parties' obligation to complete the transactions under this agreement is subject to these statements of fact being true at the effective date described in section 13 below. Each party will indemnify the other against all claims arising from the statements of fact being incorrect.


The releases described above become effective immediately on the effective date of this agreement (as described in section 13 below) and the payment of the Settlement Amount by the Debtor.


  • (a) Choice of Law. The laws of the state of govern this agreement (without giving effect to its conflicts of law principles).
  • (b) Choice of Forum. Both parties consent to the personal jurisdiction of the state and federal courts in , .
  • (c) Attorneys' Fees. If either party employs attorneys to enforce any rights arising out of or relating to this agreement, the losing party shall reimburse the prevailing party for its reasonable attorneys' fees.


No amendment to this agreement will be effective unless it is in writing and signed by a party or its authorized representative.


  • (a) Counterparts. The parties may execute this agreement in any number of counterparts, each of which is an original but all of which constitute one and the same instrument.
  • (b) Electronic Signatures. This agreement, agreements ancillary to this agreement, and related documents entered into in connection with this agreement are signed when a party's signature is delivered by facsimile, email, or other electronic medium. These signatures must be treated in all respects as having the same force and effect as original signatures.


If any one or more of the provisions contained in this agreement is, for any reason, held to be invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability will not affect any other provisions of this agreement, but this agreement will be construed as if those invalid, illegal, or unenforceable provisions had never been contained in it, unless the deletion of those provisions would result in such a material change so as to cause completion of the transactions contemplated by this agreement to be unreasonable.


  • (a) Writing; Permitted Delivery Methods. Each party giving or making any notice, request, demand, or other communication required or permitted by this agreement shall give that notice in writing and use one of the following types of delivery, each of which is a writing for purposes of this agreement: personal delivery, mail (registered or certified mail, postage prepaid, return-receipt requested), nationally recognized overnight courier (fees prepaid), or email.
  • (b) Addresses. A party shall address notices under this section to a party at the following addresses:
  • If to the Creditor:
  • If to the Debtor:
  • (c) Effectiveness. A notice is effective only if the party giving notice complies with subsections (a) and (b) and if the recipient receives the notice.


No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this agreement will be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy will be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, and no waiver will constitute a continuing waiver, unless the writing so specifies.


This agreement constitutes the final agreement of the parties. It is the complete and exclusive expression of the parties' agreement about the subject matter of this agreement. All prior and contemporaneous communications, negotiations, and agreements between the parties relating to the subject matter of this agreement are expressly merged into and superseded by this agreement. The provisions of this agreement may not be explained, supplemented, or qualified by evidence of trade usage or a prior course of dealings. Neither party was induced to enter this agreement by, and neither party is relying on, any statement, representation, warranty, or agreement of the other party except those set forth expressly in this agreement. Except as set forth expressly in this agreement, there are no conditions precedent to this agreement's effectiveness.


The descriptive headings of the sections and subsections of this agreement are for convenience only, and do not affect this agreement's construction or interpretation.


This agreement will become effective when all parties have signed it. The date this agreement is signed by the last party to sign it (as indicated by the date associated with that party's signature) will be deemed the date of this agreement.


Each party shall use all reasonable efforts to take, or cause to be taken, all actions necessary or desirable to consummate and make effective the transactions this agreement contemplates or to evidence or carry out the intent and purposes of this agreement.


Each party is signing this agreement on the date stated opposite that party's signature.




Attach original agreement


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What's a debt settlement agreement?

When a borrower defaults on a loan, it can cause stress and conflict for everyone involved. That's where a debt settlement agreement, also known as a debt settlement letter, comes in. Rather than chasing down or avoiding payments, an agreement can help the parties come together and renegotiate terms. The goal is to establish new rules to settle loans quickly and amicably that help the borrower avoid defaulting again.

Here's the information you'll need to have handy to complete your debt settlement agreement:
- Who it's coming from : Determine if a business or individual is sending the document and have the name and contact information ready.
- Who it's going to : Know who this document is going to and have the individual or business name and contact information ready. If it's a business, make sure you know the business type (LLC, corporation, etc.).
- Which state will govern it : Specify a state so it's clear what laws apply to the document.
- Subject matter: Have information about the amounts paid and debts owed.