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A debt payment plan agreement is established between a debtor and a creditor when the debtor cannot pay the full amount owed. This video explains the importance of such plans and how to create an agreement. Payment plans allow debtors to make incremental payments until the debt is fully resolved, typically on a monthly basis, but payments can vary in frequency. Creditors may permit a reduced payment amount or extend the repayment term, especially for long-standing debts. In cases of high interest rates, debtors might consolidate multiple debts into a single agreement with a third party. Essential terms must be clearly outlined in the contract.