What Is A Debt Agreement?

A debt agreement is a legally binding contract between a debtor and a creditor. This simple agreement mainly talks about debt and loan settlement or any plans agreed between both parties in order to pay back the debt. These kinds of negotiations are usually done in the form of a contract to legalize the agreement. According to financial experts, if you're the debtor and you are struggling to pay off a high amount of debt, settling with a debt agreement right away should not be your first option. It is absolutely best if you get independent advice first from any financial counselors before you enter a debt agreement.

How to Write a Debt Agreement?

debt agreement template

Debt agreements are done best if it is put into a written contract or letters. In writing a debt agreement, you have to make sure that you agree on all its terms and conditions in a formal manner. We have collected simple guide steps below that might be helpful for you in making your debt agreement. Analyze and read them.

1. Identify Your Debts

Remembering and identifying the overall debt that you made is the first step to consider in your personal debt repayment. Try to sort them out by dates to easily add them up. If all of your debt payments were made to the same creditor, then you can surely settle them easily. But if not, then you have to make sure to identify them all and list them down as possible.

2. Negotiate With Your Creditors

In your contract agreement, the next step to consider is to negotiate and decide with your creditors the fixed figure for your settlement. Most often than not, this figure is usually half of the total amount owed. If you're the debtor, then you probably need to find ways to meet this. If you're having a hard time achieving this amount, you can always try to raise other suggestions that might be helpful for your cause.

3. State The Terms And Conditions

An agreement won't be made possible if there are no agreed terms and conditions provided. The terms and conditions that is usually stated in a debt agreement are the creditor's company name, the debtor's complete name, amount agreed to as settlement, terms. In addition, it also includes the amount of payment to be made and the date payments that must be received to meet the settlement agreement.

4. Be Direct

In writing a sample agreement, you have to be specific and direct. Write it like you're asking someone for forgiveness, and that you promise to do whatever it takes to make it up to him/her. State directly that you will do everything to settle your debt.

5. Have It Signed

To formalize your negotiations, make sure that you have both parties involved to sign the legal contract. Just an important reminder, if you're the creditor/debtor, make it a habit first to read what the contract states before you sign anything. This will assure you that all the conditions entailed in it are according what you have agreed and negotiated.

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