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A debt payment plan agreement is established between a debtor and a creditor owed money, allowing the debtor to repay their debt in installments when they cannot pay the full amount upfront. This arrangement enables structured payments, typically on a monthly basis, although other frequencies are possible. Creditors may allow reduced amounts or extended terms for repayment, particularly in cases of long-standing debts. Additionally, debtors consolidating multiple high-interest debts might negotiate with a third party to settle outstanding balances under a single agreement. Creating a clear contract is essential to outline the terms of the debt payment plan.