What is a debt settlement agreement?

A debt settlement agreement is a legal document that records the terms of a negotiation between a debtor and creditor. It is designed to facilitate a payment plan or agreement between the two parties so that the debtor can repay the debt over time. In Washington, a debt settlement agreement may be used as part of a consumer debt defense law, which is a set of laws aimed at protecting consumers from unfair or deceptive debt collection practices. Under a debt settlement agreement, the debtor and creditor come to an agreement on a payment plan. It may include reducing the amount of the debt that is owed, or a set monthly payment plan that is agreed upon by both parties. The exact terms of the agreement depend on the individual situation, and should be discussed between the two parties. Once the agreement is finalized, the debtor must adhere to the terms of the agreement in order to avoid defaulting on the settlement. The debt settlement agreement is binding, so it is important that both parties understand their rights and responsibilities before signing. Depending on the agreement, the debt settlement may be reported to the major credit bureaus, which may stay on a debtor’s credit report for up to seven years. As a result, a debtor should make sure to avoid entering into a debt settlement without understanding the consequences.

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What is a debt settlement agreement?

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