Payment Agreement Form Sample
Payment Agreement Form Sample – We have worked closely with legal experts and proofreaders to create a simple payment agreement template (PDF and Word) to help you with your finances.
A payment agreement is a legal agreement that describes the payment terms between a lender (creditor) and a payer (debtor). Let’s look at a quick example to illustrate the nature of a payment contract.
Payment Agreement Form Sample
Creditors and debtors can be private individuals or any business entity. In addition, payment contracts can be used in both personal and business transactions.
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If payment agreements are not managed with appropriate parameters, they can quickly escalate into nasty legal claims and disputes. That’s why we’ve developed a simple payment agreement template to protect lenders and borrowers and debt transactions.
Borrowing money is one of the most common financial transactions in society. Whether it’s borrowing money from your parents or closing a deal with a potential business partner, many of our deals involve debt.
It’s tempting to rely on handshakes or verbal agreements when setting up a payment plan. We hear it all the time: “I promise I’ll pay you back.”
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But no matter how pure our intentions, things happen in life and sometimes debtors can’t repay their creditors.
If you don’t use a payment agreement template for this type of transaction, the risk to the creditor is that you won’t get your money back. There are no legal consequences if your debtor defaults on their repayments.
A payment agreement holds all parties accountable for a payment plan and is a point of reference when disputes escalate.
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Although payment agreements can get complicated with a list of terms, only a handful of elements are important. Let’s look at each of them below.
Your payment agreement is based on the amount the debtor wants from the creditor.
Context is important here – as a creditor, it is important to get an estimate of what the debtor wants the money for. Is it a large property, business, student fees or medical bills?
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If the creditor wants to use the money for their living expenses, it could be a red flag that they are struggling to earn enough income to meet their basic needs. Conversely, if your creditor needs money to make an unexpected one-time payment, you may feel more confident lending them money.
There are no hard and fast rules, but ultimately you have to decide how much you are willing to trust the other party.
Another important part of any payment agreement template is capturing the borrower’s repayment plan. The parties must agree on how and when payments will be made.
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For example, creditors may require payments to be made by direct deposit and paid on the 15th of each month.
Of course, the details of the payment plan can be negotiated before signing the contract, in case the debtor has different preferences regarding the payment method and frequency.
The key to a successful payment agreement is to ensure that borrowers make consistent payments according to the terms of the agreement. If debtors do not follow the payment plan, it is common for creditors to declare the remaining amount with interest.
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For example, if the debtor requests an extension of the payment plan or money, you need a clause in your template that ensures that all parties sign the new terms of the agreement.
A payment agreement is not legally binding without the written consent of both the creditor and the debtor. Signatures are legal proof that all parties acknowledge and accept the terms of the payment agreement.
With a payment order, it’s easy to rely on emails, messages or chats as your contract. While these communications can be seen as a contract, a signed contract gives you greater protection and more visible consent from all parties.
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While there are no hard and fast rules in your contract, below is a list of standard inclusions.
We understand that you may need to make changes to our template based on your transactional needs. We have made the payment agreement form available in Word so you can make changes if necessary.
If you intend to make significant changes to the template, we recommend that you consult with an attorney to ensure adequate protection.
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– This Payment Agreement (hereinafter “Agreement”) is concluded on __________________ (“Effective Date”) ____________________________, with the address __________________ (hereinafter “Debtor”) and ___________________ ______________ (hereinafter “Card Issuer”) address (hereinafter “Parties”).
– The parties agree to enter into a new contract to guarantee the amount owed, where the above-mentioned amount __________________ will be transferred to the structured payment contract according to the conditions below.
– The debtor guarantees and confirms that the Parties have agreed to ensure the deficit in the payment plan as planned in accordance with this agreement.
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– If the debtor does not submit the payments according to the payment plan within a reasonable time, the creditor has the right to recognize the remaining amount and, if it exists, the current interest immediately due.
– If any provision of this Agreement is found to be invalid and unenforceable by a court of competent jurisdiction, the remaining provisions shall continue to be enforced as intended by the parties.
– All disputes or disagreements arising out of or related to this Agreement shall be submitted to __________________ (arbitration/mediation/negotiations) in accordance with and under the laws of __________________.
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– This Agreement contains the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, inducements and terms, whether express or implied, oral or written, relating to any subject matter hereof. of the matter. The express terms herein shall control and supersede any transaction and/or use inconsistent with any of the terms herein.
– The parties agree that all changes to this agreement must be in writing and signed by both parties.
– The parties agree to the terms set forth in this Agreement and this is evidenced throughout by their signatures: A Payment Agreement (or Repayment Agreement) describes an installment plan for repaying an outstanding balance over a specified period of time. This is common when the amount is too large to pay the debtor in one lump sum.
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Recurring ACH Authorization – Often required as part of a payment agreement to automatically withdraw funds from a debtor’s account.
A payment plan is a way for someone to pay for something over a period of time. This is often when an amount is owed that is unaffordable to the individual and the creditor promises to pay over months or years.
Most payment plans have little or no interest if payments are made on time. This is a common incentive for a debtor to default on their payment plan.
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To draw up a payment plan, the consent of the creditor and the debtor and the definition of the terms of the contract are necessary. For unpaid balances, a payment plan is often the debtor’s “last resort” to discharge the debt.
The debtor and the creditor must agree on a mutually beneficial payment arrangement. There are two (2) types of payment plans:
After confirming the amount, the terms of the payment plan should be written down in a simple contract. There is often no collateral to motivate the debtor to pay, either interest-free payments or a discounted total balance.
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For payment plans over $10,000, it is recommended that both parties add a notary to the contract and sign in the presence of a notary.
Use the Credit Card/ACH Authorization form to obtain the debtor’s payment information. Most creditors require the debtor to set up automatic payments, which charge the debtor’s credit card or bank account for each installment period.
After full payment of the remaining amount, the debtor is released from all financial responsibility. This can be completed through a discharge form and can also be used by the debtor to clear unpaid balances from their credit report.
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Debtor: [DEBTOR NAME] with mailing address [MAIL ADDRESS] (“Debtor”) and confirms that he owes:
II. BALANCE. As of the Effective Date, the Debtor owes the Creditor $[AMOUNT] (the “Current Balance”) in respect of: (check one)
☐ – carry interest. The total amount will be calculated with an interest rate of [#]% compounded: (select one)
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☐ – Does NOT bear interest. No interest is added to the total amount. The only obligation of the debtor towards the creditor is to repay the capital amount.
IV. DISCOUNT AMOUNT. In consideration of the debtor’s good faith in repaying the current balance, the creditor agrees to: (check one)
☐ – DO NOT offer a discounted amount. The debtor is obliged to pay the entire current balance
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