Debt Settlement Agreement

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 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 in