Business Debt Collection

Sample Business Debt Settlement Agreement

This sample business debt settlement agreement will be useful to any business that is collecting delinquent business debts and has gotten to the state where business debt negotiations are complete and it's time to settle a business debt.

Looking for a sample business debt settlement agreement? Here is a sample settlement agreement that one of our portfolio firms used to close out a situation in which they had not been paid for some work they did.

When settling a business debt with a customer, be sure to create a legal agreement that documents the debt settlement terms.

As you know, when somebody doesn't pay you a business debt, you have a variety of options open to you.

We've discussed business debt collection methods in other articles on this site. In the best case scenario, you are paid in full without having to sue a customer. Generally speaking, suing a custom should be an act of last resort. It's expensive and time-consuming - usually, only the lawyers do well.

Let's suppose that through discussions, threats and what not, you've gotten to the point where your customer is ready to settle the debt.

Maybe you got that far by using our sample business debt demand letter or maybe you just negotiated the debt settlement verbally.

Regardless of how you got to the point of settling a business debt, now is not the time to do anything on a handshake. Get your settlement agreement documented in writing and define terms that will avoid a future nightmare scenario. Not having both parties agree to a debt settlement contract can be a huge mistake.

To be sure, you will want to talk to a lawyer. But if you are looking for a starting point, we've provided the sample business debt settlement agreement below.

Your own circumstances will vary. This was used for collection of a debt in which the client of a marketing firm refused to pay for work that was done on their behalf, including a web site. Taking down a website because the client didn't pay proved to be an effective mechanism to close out the issue.

Sample Business Debt Settlement Agreement

Settlement. The parties have agreed to settle finally and forever any and all claims between them of any nature whatsoever from any and all liability or damages of any kind, known or unknown, in contract or in tort.

Negotiated Settlement. The parties agree that the terms of this Agreement are the result of negotiations between the parties, and constitute a final accord and satisfaction concerning all disputes between them.

Payment Contingency. All settlement terms herein are contingent upon wire transfer receipt of final payment in the amount of $[Insert Dollar Amount] to the [Insert Payee Company Name] account.

Assignment of All Rights and Title. As part of this settlement agreement, [Payee] hereby transfers, conveys and irrevocably assigns in perpetuity all right, title and interest to, including any derivative works thereof, the creative outputs developed for [Debtor], including but not limited to logo design, site design and code and designed printed materials.

Web Site and Domain Name Transfer. Upon receipt of settlement payment, [Payee] agrees to immediately initiate transfer of all domain names purchased on behalf of [Debtor]. [Payee] shall also immediately relinquish control of the website to [Debtor] by emailing userid and password information directly to [Manager]. From that point on, [Payee] will not access the website for any reason whatsoever.

Agreement Not to Sue. Except only to enforce the terms of this Agreement, each party agrees not to bring any claim of any kind against the other party to this Agreement concerning any matter released by this Agreement. Each party further agrees that this Agreement constitutes a bar to any such future claim.

Confidentiality. The parties agree the terms and conditions of this Agreement shall be confidential, and that no party shall disclose any part of this Agreement except (i) as required by subpoena or otherwise by law or (ii) to either party's accountants, tax preparers, legal counsel or financial advisors.

No Wrongdoing. Neither party to this Agreement admits the existence of any liability or wrongdoing, and all such liability is expressly denied. Furthermore, the parties each agree that neither shall disparage the other to any third party at any time.


No modification to any provisions contained in this Agreement shall be binding upon any party unless made in writing and signed by both parties.

If any provision of this Agreement is held to be unenforceable for any reason, the remaining parts of the Agreement shall remain in full force and effect.

Each party represents he or it has not assigned any portion of the claims released under this Agreement to any third party.

This Agreement shall be construed in accordance with Illinois law.

Except as expressly set forth in this Agreement, this Agreement constitutes a single, integrated written contract expressing the entire agreement of the parties to this Agreement. Any other agreements, discussions, promises, and representations (other than the Continuing Agreements) have been and are integrated into and superseded by this Agreement.

Each party has fully considered this Agreement. Each recognizes that no facts can ever be known with certainty and that no representations or warranties other than as set forth in this Agreement have been made to induce this Agreement.

Each party represents he or it has authority to enter into Agreement on behalf of his or its respective organization.

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