Debt Settlement Agreement

This agreement helps you prevent losing your money by setting out details such as the settlement amount, date for payment and terms to avoid any future disputes. You need this in case you have given out money to someone and you want to settle the debt. Now, in case the debtor is unable to pay back the full amount, instead of wasting furthermore time, you can reach an agreement as to how much the debtor can pay you.

This agreement can be legally enforced by printing it on a non judicial stamp paper, affixing the stamp duty as per the state laws, with the signatures of both the parties agreeing to it. You may use it if you are a creditor or a debtor who has agreed to settle a debt and need to write down the terms of that settlement.

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Frequently Asked Questions

This agreement helps you prevent losing your money by setting out details such as the settlement amount, date for payment and terms to avoid any future disputes. You need this in case you have given out money to someone and you want to settle the debt. Now, in case the debtor is unable to pay back the full amount, instead of wasting furthermore time, you can reach an agreement as to how much the debtor can pay you.
Who needs this agreement and why?
This agreement can be legally enforced by printing it on a non judicial stamp paper, affixing the stamp duty as per the state laws, with the signatures of both the parties agreeing to it. You may use it if you are a creditor or a debtor who has agreed to settle a debt and need to write down the terms of that settlement.
What is the use of Annexure?
The following are all the major clauses included in this agreement:
  1. Acknowledgment of Debt- It includes that the Debtor agrees and acknowledges that it is indebted to the Creditor in the full amount of the Debt.
  2. Settlement Amount-This clause includes the amout of debt given.
  3. Time of Essence-This clause specifies the period in which the debtor has to pay back the money to the debtor.A failure to perform by the time specified will be a material breach of the contract.
  4. Final Settlement-This clause includes that the parties to agreement agree to settle finally and forever all tha claims between them of any nature.
  5. Confidential-This clause includes that both the parties agree that the terms and conditions of this agreement would remain confidential.
  6. Dispute Resolution-This clause contains that in case of any dispute between the parties to agreement, the matter shall be referred to arbitration,and the parties agree that the decision of the arbitrator(s) shall be final and binding.
  7. Modifications to agreement- This clause says that modification and amendments to this Agreement shall be enforceable only if they are in writing and are signed by authorized representatives of both parties.
  8. Waiver-This clause says that the agreement cannot be waived unless such waiver or consent is given in writing and signed by the party claimed to have waived or consentd.
  9. Applicable Law-This clause says that this agreement will be governed by the laws of India.
  10. Severability-This clause says that If any provision of this agreement is held invalid, void, or unenforceable under any applicable statute or rule of law, it shall to that extent be deemed omitted, and the balance of this agreement shall be enforceable in accordance with its terms.
These are a few terms which might be useful to read about for a better understanding of this agreement:
  1. Debtor- a person or entity that owes money.
  2. Creditor-a person or company to whom money is owing.
  3. Waiver- the voluntary surrender of any right or claim by a party.
  4. Severability- it means that If any provision of this Agreement is held invalid, void, or unenforceable under any applicable statute or rule of law, it shall to that extent be deemed omitted, and the balance of this Agreement shall be enforceable in accordance with its terms.
How to use this agreement?
The following are all the major clauses included in this agreement:
  1. Acknowledgment of Debt- It includes that the Debtor agrees and acknowledges that it is indebted to the Creditor in the full amount of the Debt.
  2. Settlement Amount-This clause includes the amout of debt given.
  3. Time of Essence-This clause specifies the period in which the debtor has to pay back the money to the debtor.A failure to perform by the time specified will be a material breach of the contract.
  4. Final Settlement-This clause includes that the parties to agreement agree to settle finally and forever all tha claims between them of any nature.
  5. Confidential-This clause includes that both the parties agree that the terms and conditions of this agreement would remain confidential.
  6. Dispute Resolution-This clause contains that in case of any dispute between the parties to agreement, the matter shall be referred to arbitration,and the parties agree that the decision of the arbitrator(s) shall be final and binding.
  7. Modifications to agreement- This clause says that modification and amendments to this Agreement shall be enforceable only if they are in writing and are signed by authorized representatives of both parties.
  8. Waiver-This clause says that the agreement cannot be waived unless such waiver or consent is given in writing and signed by the party claimed to have waived or consentd.
  9. Applicable Law-This clause says that this agreement will be governed by the laws of India.
  10. Severability-This clause says that If any provision of this agreement is held invalid, void, or unenforceable under any applicable statute or rule of law, it shall to that extent be deemed omitted, and the balance of this agreement shall be enforceable in accordance with its terms.

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