Debt Settlement Agreement

Debt Settlement Agreement

This Debt Settlement Agreement (“Agreement”) is entered into on [Date], by and between:
Creditor: [Full Legal Name], with a mailing address of [Address], email [Email], phone [Phone]
Debtor: [Full Legal Name], with a mailing address of [Address], email [Email], phone [Phone]
Together, the “Parties.”

1. Background and Purpose

The Parties acknowledge that Debtor owes or Creditor alleges Debtor owes an outstanding balance arising from [describe account/contract/invoice/loan] dated [date] with an asserted current balance of $[amount]. The Parties wish to resolve the matter fully and finally on the terms below.

2. Settlement Amount and Payment Terms

Settlement Amount: $[amount] (the “Settlement Amount”).
Payment Method: [wire/ACH/check/portal] to the account specified in Exhibit A.
Payment Timing:
Option A (lump sum): $[amount] due on or before [date].
Option B (installments): $[amount] due on [date]; $[amount] due on [date]; final payment $[amount] due on [date].
Application of Payments: Payments apply to the Settlement Amount only and do not revive any previously waived fees unless this Agreement states otherwise.

3. Conditions Precedent

Creditor’s obligations (including any release) are conditioned on timely receipt of all payments in cleared funds and Debtor’s compliance with this Agreement. If third-party approvals, lien releases, or court dismissals are required, the Parties will cooperate promptly.

4. Release by Creditor (upon receipt of the Settlement Amount)

Upon timely payment of the Settlement Amount and satisfaction of Section 3, Creditor releases Debtor and Debtor’s successors and assigns from all claims and causes of action arising out of the account described in Section 1 through the Effective Date, excluding obligations created by this Agreement.

5. Release by Debtor (optional; select one)

☐ One-way release only (no release by Debtor).
☐ Mutual release: Upon satisfaction of Section 4, Debtor releases Creditor and its officers, employees, agents, and assigns from all claims relating to the account described in Section 1 through the Effective Date, excluding obligations created by this Agreement.

6. No Admission of Liability

This Agreement is a compromise of disputed claims. No Party admits fault or liability.

7. Default and Cure

A payment is in default if not received by [time] on the due date. Debtor has a cure period of [X] calendar days after written notice from Creditor. If uncured, Creditor may declare the Settlement Amount immediately due and pursue available remedies, less any payments received. If an existing lawsuit was stayed or dismissed without prejudice, Creditor may resume or refile consistent with law.

8. Dismissal of Actions and Lien Releases

If litigation or arbitration is pending, the Parties will file a stipulation to dismiss with prejudice within [X] days after the Settlement Amount clears. Creditor will deliver any necessary lien releases within [X] days of final payment.

9. Confidentiality (optional)

The Parties agree to keep the terms and amount confidential except as required by law or as disclosed to legal, tax, or financial advisors. Either Party may make limited statements necessary to comply with reporting obligations.

10. Credit Reporting and Communications

Creditor will report the account status in accordance with applicable law and its policies (e.g., “paid in full” or “settled”). Debtor acknowledges Creditor cannot guarantee third-party credit bureau outcomes. Communications will cease in accordance with law once obligations are satisfied.

11. Tax Matters

The Parties acknowledge that forgiven amounts may be taxable in some jurisdictions and that tax forms (e.g., Form 1099-C) may be issued where required. Each Party is responsible for its own tax advice and liabilities.

12. Representations and Warranties

Each Party represents that it has authority to enter this Agreement; that it has not assigned the claims being released; and that the signatory is duly authorized. Debtor represents the funds used are not from unlawful sources.

13. Governing Law and Dispute Resolution

This Agreement is governed by the laws of [State/Country], without regard to conflict-of-law rules. Disputes will first be addressed in good-faith discussion; failing resolution within [X] days, the Parties may proceed to [mediation/arbitration/litigation] in [venue].

14. Notices

Notices under this Agreement must be in writing and delivered by email with confirmation, certified mail, or recognized courier to the addresses listed above (or as updated by notice).

15. Entire Agreement; Amendments; Severability

This document is the entire agreement concerning the settlement of the account described in Section 1 and supersedes prior discussions. Amendments must be in a signed writing. If any provision is unenforceable, the remainder remains effective.

16. Counterparts; Electronic Signatures; Effective Date

This Agreement may be executed in counterparts and by electronic signature, each deemed an original. The “Effective Date” is the date the last Party signs, unless Section 2 specifies otherwise.

17. Signatures

Creditor:
Name:
Title (if entity):
Signature:
Date:

Debtor:
Name:
Title (if entity):
Signature:
Date:

Exhibit A – Payment Instructions
Bank name: [ ]
Account name: [ ]
Routing/IBAN/SWIFT: [ ]
Account number: [ ]
Reference: [ ]