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A debt settlement agreement is used to formalize a renegotiation between a debtor and a creditor, often resulting in a reduction or elimination of the original debt amount. This agreement allows the creditor to forgive a portion of the debt, releasing the debtor from any remaining obligations. Typically, this forgiveness occurs after the debtor makes the final payment as stipulated in the settlement. Upon execution of the agreement, the creditor is expected to remove any obligations of the debtor under the original contract and relinquish the right to pursue any further actions related to the original agreement.
