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A debt settlement agreement is a document that formalizes the renegotiation between a debtor and creditor. It typically reduces or eliminates the original debt amount, allowing the creditor to forgive part of it and release the debtor from any remaining obligations. This agreement usually involves the debtor making a final payment to the creditor after its execution. Following this, the creditor must remove any obligations from the debtor under the original contract and cannot pursue any collection actions related to that agreement.