Debt cancellation agreement sample: A comprehensive guide

Debt cancellation agreements, also known as debt settlement agreements, are contracts between debtors and creditors that settle outstanding debts. These agreements are an ideal solution for those who are struggling to repay their debts and want to negotiate a settlement with their creditors.

If you are looking for a debt cancellation agreement sample, you have come to the right place. This article will go over everything you need to know about debt cancellation agreements and provide you with a sample agreement to help you get started.

What is a debt cancellation agreement?

A debt cancellation agreement is a legal document between a debtor and a creditor that outlines the terms of a debt settlement. These agreements are used when a debtor is unable to pay back their debts in full and wants to negotiate a settlement with their creditor.

The agreement typically outlines how much of the debt will be cancelled or settled, how it will be paid, and any other terms and conditions that both parties must agree to.

Why do you need a debt cancellation agreement?

Debt cancellation agreements can be beneficial for both debtors and creditors. For debtors, they provide a way to settle outstanding debts and avoid bankruptcy. For creditors, they provide a way to recover at least some of the money owed to them.

Having a debt cancellation agreement also helps protect both parties by providing a legally binding document that outlines the terms of the settlement. This can prevent misunderstandings and disputes in the future.

Debt cancellation agreement sample

Below is an example of a debt cancellation agreement that can be used as a template:

DEBT CANCELLATION AGREEMENT

THIS AGREEMENT (“Agreement”) is made on _____________, 2021, by and between [Debtor Name], with a mailing address of [Address], (“Debtor”) and [Creditor Name], with a mailing address of [Address] (“Creditor”).

RECITALS

WHEREAS, Debtor owes Creditor an outstanding debt of $_____________.

WHEREAS, Debtor and Creditor desire to settle the debt for less than the full amount owed.

WHEREAS, Debtor and Creditor desire to enter into this Agreement to formalize their debt settlement.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, Debtor and Creditor agree as follows:

1. Debt Settlement: Debtor agrees to pay Creditor the sum of $_____________ to settle the outstanding debt owed. Creditor agrees to accept this amount as payment in full of the outstanding debt.

2. Payment: Debtor agrees to pay the settlement amount in full no later than _____________ [Date]. Payment shall be made via ________________ [Payment method].

3. Release: Upon receipt of payment, Creditor agrees to release Debtor from all further obligations related to the outstanding debt.

4. Default: In the event that Debtor fails to make payment as agreed, Creditor reserves the right to pursue all available legal remedies to collect the outstanding debt.

5. Governing Law: This Agreement shall be governed by and construed in accordance with the laws of the State of _______________.

6. Counterparts: This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.

Debtor:

_________________________

[Debtor Name]

_________________________

[Debtor Signature]

Creditor:

_________________________

[Creditor Name]

_________________________

[Creditor Signature]

Conclusion

Debt cancellation agreements can be a helpful tool for those who are struggling with debt. By using the above debt cancellation agreement sample as a template, you can create your own agreement and settle outstanding debts with creditors. Remember to always consult with a legal professional before entering into any debt settlement agreements.