What is Agreement To Compromise Debt?
A debt compromise agreement is also known as a debt settlement agreement, Debt negotiation settlement or credit settlement. This agreement usually captures negotiated or settle claim details on an already existing loan. The lender and borrower sign this agreement where the lender agrees to forgo some part of the borrowed money under certain situations.
The debtor is unable to pay back the money due and therefore a middle way of settlement is reached. The lender is the giver and borrower the person who borrows money. The lender and borrower often negotiate and try to amicably settle the claim instead of getting into legalities.
The lender and borrower are also known as the creditor and debtor in legal agreements.
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The agreement addresses clauses like-
Original loan amount
The agreed sum that the creditor forgoes
Payment schedule
Right of the creditor to claim legal expenses in case of default
Right of the debtor to claim legal expenses in case of default
Governing laws
Rules governing failure to pay
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