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A debt settlement agreement is a document that finalizes the renegotiation between a debtor and a creditor regarding an original debt. This agreement typically lowers or eliminates the debt, allowing the creditor to forgive part of it, thereby releasing the debtor from further obligations. In return for the debtor's final payment post-agreement, the creditor must waive any remaining claims under the original contract and agree not to pursue any auction or legal action against the debtor related to that agreement.
