Debt Settlement Agreement (Drafting)

A debt settlement agreement is basically a formal written agreement between a lender and a borrower for final settlement of his/her debt along with an interest amount that is payable. A debt settlement agreement can be used by a lender for the purpose of settling final dues that includes an interest amount or principal due. It can also be used for settling dues owed to private persons. A debt settlement agreement includes agreement details of the amount borrowing, interest rate, payable amount, and the acceptance by the lender of the final settlement amount.

A debt settlement agreement includes agreement details of the amount borrowing, interest rate, payable amount, and the acceptance by the lender of the final settlement amount.  A debt settlement agreement can be used by a lender for the purpose of settling final dues that includes an interest amount or principal due. It can also be used for settling dues owed to private persons.Banks and other financial institutions have their own format for a debt settlement agreement that are scrutinized by their lawyers. A onetime settlement (OTS) is a loan scheme offered by banks and financial institutions to borrowers having difficulties in making payments as per loan terms and conditions. This scheme is offered only on genuine basis and banks will provide a short time within which the borrower can pay a reduced amount of the loan. Therefore, the balance or difference amount would be written-off by the bank.

 

Features of Debt Settlement Agreement

Execution:

A debt compromise agreement must be printed on non-judicial stamp paper with a value of Rs. 10/-. This can vary from state to state along with two copes given to borrower and lenders.

One Time Settlement (OTS): A onetime settlement (OTS) is a loan scheme offered by banks and financial institutions to borrowers having difficulties in making payments as per loan terms and conditions. This scheme is offered only on genuine basis and banks will provide a short time within which the borrower can pay a reduced amount of the loan. Therefore, the balance or difference amount would be written-off by the bank.

CIBIL Score: After a borrower completes a debt settlement or one time settlement, they will no longer be approached by the bank for payment. But, whenever a bank or financial institution enters into a debt compromise agreement, the transaction is reported to CIBIL and the loan would show as written-off or settled. The CIBIL report is later viewed by other leaders as a sign of caution or negative behavior. 

Monthly Budget: Debt settlement agreements help you plan your monthly budget because it would invisible to your creditors list.

Interest and outstanding payments:Monthly payments will witness a fall as the debt settlement program would erase the interests and fees accrued on the outstanding amount. Over limit fees would also go down once you join the debt settlement program.

Documents


Passport Photo

Passport photo of all parties.


PAN Card

PAN card of all parties.


Aadhar Card

Aadhar card of all parties.


Utility Bill

Utility bill of Electricity or Telephone.


Address Proof

Valid Address Proof of all the parties.


Licence

Valid Driving Licence of all the parties.


Terms and Conditions

Terms and Conditions between the parties.


Other Documents

Other documents will be intimated through e-mail.

FAQ

A settlement agreement is a legally binding contract between two parties, lender and borrower which settles claims.

A settlement agreement is a document by which an employee agrees to waive their rights to bring any kind of legal action against their employer. Often, a settlement agreement is used in a redundancy situation. However, a settlement agreement is not the same thing as redundancy.

A settlement agreement can be entered into during or after the termination of employment.

Settlement Agreements are voluntary and open for negotiation. Regardless of what is being offered by your employer, you should never forget that you are not legally obliged to agree and sign the Settlement Agreement.

Sometimes, the confidentiality of the settlement is crucially important to the employer. While simple confidentiality clauses are often included in settlement terms and coupled with enforcement mechanisms, it is uncommon to see cases that address the enforceability of these clauses.

Overturning a settlement agreement that was reached through settlement and agreement isn't easy but can be done. Even in these cases, courts will usually only throw out a settlement agreement if the petitioning party can provide evidence: Of fraud, deceit, coercion, duress, misrepresentation, or overreaching etc.