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A debt settlement agreement serves to confirm the renegotiation or settlement between a debtor and a creditor. It typically reduces or eliminates the original debt amount, enabling the creditor to forgive a part of the debt and release the debtor from further obligations. This forgiveness usually occurs after the debtor makes the final payment as per the settlement terms. Additionally, the creditor is required to forgo any remaining obligations under the original contract and cannot pursue any legal action against the debtor concerning the original agreement.
