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A debt payment plan agreement is established between a debtor who owes money and a creditor. In this video, the rationale for such plans and how to create an agreement are explored. When a debtor cannot pay the full debt amount upfront, creditors may opt for incremental payments, allowing the debtor to settle the debt over time through installments, typically due monthly, but adaptable to other schedules. Creditors might permit reduced payments or extended terms for repayment, especially for longstanding debts. Additionally, if high interest rates lead to consolidation, a debtor may negotiate with a third party to combine outstanding debts into a single repayment agreement. It's crucial to document all terms in the contract.