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A debt payment plan agreement is established between a debtor and a creditor when the debtor cannot afford to pay the full amount owed. This agreement allows the debtor to make incremental payments, typically on a monthly basis, until the debt is fully paid. In some cases, creditors may accept a reduced amount or extend the payment term for longstanding debts. If a debtor is consolidating debts due to high interest rates, they may negotiate with a third party to settle outstanding balances and create a single payment plan. The key steps include outlining the payment structure and terms in the contract.