What is a settlement agreement?

A settlement agreement is a legally binding document used to resolve disputes between parties. This type of agreement is often used when creditors and debtors are in disagreement over the terms of a debt or other financial obligation. In the state of New York, a settlement agreement must be written, signed by both parties, and witnessed or notarized in order to become legally binding. Under New York’s creditors rights law, settlement agreements are used to finalize disputes between the creditor and debtor, such that one party agrees to forgive or accept a reduced amount of money in return for full repayment of the debt. The agreement must be detailed and clear, outlining exactly which terms the creditor and debtor have agreed upon. This could include repayment schedules, interest fees, penalties, and other details. It is important to note that neither party can force the other into a settlement agreement. Rather, the agreement must be made of free will, and both parties must be fully aware of the terms of the document before signing it. Furthermore, both parties must keep the settlement agreement confidential, as breaching the confidentiality of the agreement could cause the document to become void. Lastly, New York creditors must follow certain procedures when seeking to enforce a settlement agreement, such as filing a motion to enforce the agreement in court.

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