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Credit Card Debt Settlement Agreement

Credit Card Debt Settlement Agreement Template for Australia

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Key Requirements PROMPT example:

Credit Card Debt Settlement Agreement

"I need a Credit Card Debt Settlement Agreement for a $50,000 debt to be settled at 60% of the original amount, with monthly installment payments over 24 months starting March 2025, and including provisions for early payment without penalties."

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Document background
The Credit Card Debt Settlement Agreement is a crucial document used in Australian financial services when a debtor and creditor agree to settle credit card debt for less than the full amount owed. This document becomes necessary when a debtor is unable to pay their full credit card debt but has the means to make a partial payment, either as a lump sum or through a structured payment plan. The agreement must comply with Australian consumer credit legislation, including the National Consumer Credit Protection Act 2009 and the Australian Consumer Law. It typically includes details of the original debt, the agreed settlement amount, payment terms, consequences of default, and credit reporting arrangements. This document provides legal protection for both parties and helps avoid potential bankruptcy proceedings while offering a structured path to debt resolution.
Suggested Sections

1. Parties: Identifies the creditor (credit card issuer/debt owner) and debtor, including full legal names, addresses, and any relevant identification numbers

2. Background: Outlines the existence of the credit card debt, original amount, account details, and circumstances leading to the settlement

3. Definitions: Defines key terms used throughout the agreement including 'Settlement Amount', 'Original Debt', 'Payment Plan', and other relevant terms

4. Acknowledgment of Debt: Formal acknowledgment of the original debt amount and account details by the debtor

5. Settlement Terms: Specifies the agreed settlement amount and the percentage of original debt being forgiven

6. Payment Terms: Details of how and when payments will be made, including payment method, schedule, and deadlines

7. Default Provisions: Consequences of missing payments or breaching the agreement, including reinstatement of original debt

8. Release of Liability: Terms of release from the original debt upon completion of settlement payments

9. Credit Reporting: How the settlement will be reported to credit reporting agencies

10. General Provisions: Standard contract clauses including governing law, entire agreement, and amendments

Optional Sections

1. Multiple Creditor Provisions: Required when the settlement involves multiple credit card debts or creditors

2. Guarantor Provisions: Include when there is a guarantor for the debt who must be party to the settlement

3. Hardship Provisions: Include when the settlement is based on financial hardship and includes special arrangements

4. Security Interest: Include when any form of security is provided for the settlement payments

5. Confidentiality: Include when parties wish to keep the settlement terms confidential

6. Tax Implications: Include when the debt forgiveness amount is significant and may have tax consequences

Suggested Schedules

1. Schedule A - Original Debt Details: Detailed breakdown of the original credit card debt, including account numbers, dates, and amounts

2. Schedule B - Payment Schedule: Detailed payment plan showing dates, amounts, and payment methods

3. Schedule C - Settlement Calculations: Breakdown of how the settlement amount was calculated

4. Appendix 1 - Financial Hardship Documentation: If applicable, documentation supporting hardship claims

5. Appendix 2 - Credit Report Instructions: Specific instructions for how the debt will be reported to credit agencies

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Business Day
Card Issuer
Commencement Date
Completion Date
Credit Card Account
Credit Card Debt
Credit Report
Creditor
Default Event
Default Interest
Debtor
Effective Date
Final Payment
Financial Hardship
GST
Governing Law
Initial Payment
Installment Payment
Interest Rate
Original Debt
Outstanding Balance
Payment Date
Payment Method
Payment Schedule
Release Date
Secured Creditor
Settlement Amount
Settlement Completion
Settlement Date
Settlement Payment
Settlement Period
Settlement Terms
Statement of Account
Termination Event
Total Debt
Unsecured Debt
Relevant Industries

Banking

Financial Services

Consumer Credit

Debt Collection

Legal Services

Consumer Services

Financial Technology

Relevant Teams

Legal

Credit Operations

Collections

Risk Management

Compliance

Consumer Credit

Settlement Operations

Account Management

Financial Hardship

Credit Assessment

Relevant Roles

Credit Manager

Debt Collection Officer

Financial Services Manager

Credit Risk Officer

Legal Counsel

Compliance Officer

Account Manager

Settlement Officer

Credit Operations Manager

Consumer Credit Officer

Financial Hardship Officer

Collections Team Leader

Industries
National Consumer Credit Protection Act 2009 (Cth): Primary legislation governing consumer credit in Australia, including credit card debt. It regulates credit activities, requires credit providers to be licensed, and sets out responsible lending obligations.
Australian Securities and Investments Commission Act 2001 (Cth): Provides consumer protection in relation to financial services and products, including credit cards and debt settlement services.
Competition and Consumer Act 2010 (Cth) - Australian Consumer Law: Contains provisions about unfair contract terms, misleading or deceptive conduct, and consumer guarantees that apply to debt settlement agreements.
Banking Act 1959 (Cth): Regulates banking activities and provides framework for the regulation of authorized deposit-taking institutions that issue credit cards.
Privacy Act 1988 (Cth): Governs the handling of personal information, including credit reporting and financial information, which is crucial for debt settlement agreements.
Bankruptcy Act 1966 (Cth): Relevant as debt settlement agreements are often used as an alternative to bankruptcy, and the act provides context for insolvency arrangements.
Debt Collectors (Field Agents and Collection Agents) Act 2014: Regulates debt collection practices and must be considered in the context of debt settlement arrangements.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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