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A debt settlement agreement is a formalized renegotiation or settlement between a debtor and a creditor. It typically reduces or eliminates the original debt amount and enables the creditor to forgive part of the debt, releasing the debtor from any remaining obligations. This forgiveness usually comes after the debtor makes the final payment stipulated in the agreement. Following this, the creditor is expected to remove the debtor's obligations from the original contract and relinquish any rights to pursue actions against the debtor related to that agreement.
