Agreement to compromise debt is an arrangement entered into between lender and borrower to lesser a debt amount and both parties agree to follow with the lesser amount and the payment terms set forth again. In simple words, it is a legal agreement that allows you to compromise the repayment of a debt that borrower cannot pay due to financial crises or other reasons. According to the terms and conditions mentioned in an agreement to compromise debt, a lender agrees to accept short amount from the borrower other than the full amount of the loan in order to settle the debt. A debt collector may agree in an agreement to compromise debt to let you pay less than the total amount you owe on a debt. It may include information like agreed compromised sum and repayment schedule for the debt or loan, right of creditor in details to claim the full sum in the event of default, details of creditor’s rights to claim legal expenses in the event of default nature of the agreement and other conditions etc.
As a lender if you are failed to collect repayment of loan or debt from borrower, in this case writing of an agreement to compromise debt is a best plan to come over the problem. In this agreement a debtor will agree to pay off specific sum of money other than full amount of loan. A carefully prepared agreement to compromise debt can help you get back some of your losses so it will be a best option for you to settle a debt with borrower. Putting new terms and conditions about the debt in writing by means of agreement to compromise debt provides you a legal way to get debt or loan partially repaid so you can go for other things in your life. Agreement to compromise debt it usually prepared when a debtor unable to repay a loan or debt. As a lender, instead of wasting time and money chasing down a debtor, you should prepare an agreement as to how much the debtor can pay you the amount.
Here is preview of Sample Agreement to Compromise Debt created using MS Word,
Theoretically you can have an oral agreement to compromise debt but nobody does this and it definitely not legally recommended. Such agreements must be in writing so you can present it as a written evidence of debt settlement. In result of the agreement to compromise debt, if the debtor fails again to make timely payment as agreed in the agreement, then the total and actual amount of the debt or loan becomes due and a lender can also take a legal action against borrower to get the money back in full. Internet is full with wide range of sample and templates that one can utilize to write an agreement to compromise debt if there is lack of knowledge and information about how to create it accurately. Legal representatives and lawyers also provide their services to prepare such agreements but they may ask you to pay service charges in return. It is best for you to download an appropriate sample agreement to compromise a debt from web to get assistance in this regard.