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A payment agreement allows people to pay off outstanding debt in smaller amounts until the full amount is paid. The agreement can vary and may include fees and interest. It begins when a business or debt collector contacts the debtor and negotiations can begin. The agreement usually takes effect immediately, with the first payment due within thirty days. Breaching the agreement can result in legal action.
When the outstanding debt balance exceeds the amount of money a person can afford to pay, they can often enter into a payment agreement with a business or attorney. This arrangement usually differs from case to case and allows people to pay lower amounts on a regular basis until the full amount owed is paid. Fees, interest and other additional amounts may be added to the payment agreement.
Also known as an installment agreement, a payment agreement usually begins when one party contacts the other. This is usually a business or debt collector calling or mailing the person owing the debt. If you have made multiple unsuccessful attempts to collect the debt, a law firm representing the business can take over the debt and attempt to collect payment. If the debtor claims that he cannot afford to pay promptly, negotiations for this type of settlement can begin.
A payment agreement usually takes effect immediately, with the first payment due within thirty days of entering into the agreement. Payments can be very small, large or evenly split, depending on the terms of the agreement and the invoice amount. The duration of the agreement also varies on a case-by-case basis. Although many debt collectors want to pay off the debt within a year, if the debt is large, a longer settlement can be issued.
Verbal agreements are usually sufficient to establish a payment agreement. Some debt collectors, however, may want to issue a payment agreement form that the debtor must fill out and return. Most debtors who agree to the terms will receive a payment agreement letter in the mail once the agreement is made. A letter confirming the payment of the debt will also need to be sent after the conclusion of the agreement. Debtors can request this letter as part of their payment agreement.
The breach of a payment agreement can be considered as the termination of a contract. If the debtor fails to make a payment without notifying the debt collector, he may have his agreement revoked, with which the debt will again be due immediately and in full. Legal action can then be taken against the debtor. Many debt collectors will make further arrangements if a debtor gives them notice of inability to pay, allowing them to make an additional or late payment.
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