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A debt settlement agreement formalizes the renegotiation or settlement between a debtor and creditor, typically resulting in a reduction or elimination of the original debt. The agreement allows the creditor to forgive part of the debt, releasing the debtor from further obligations. This release usually occurs after the debtor makes a final payment following the execution of the settlement. The creditor is then required to eliminate any obligations of the debtor under the original contract and to refrain from pursuing any legal actions related to that agreement.
