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Debt Settlement Agreement Template for United Arab Emirates

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Debt Settlement Agreement Template

I need a Debt Settlement Agreement Template for a UAE-based manufacturing company settling a AED 2.5 million commercial debt with a supplier, with monthly installments starting March 2025 and including provisions for early payment discounts.

What is a Debt Settlement Agreement?

The Debt Settlement Agreement Template is designed for use in the United Arab Emirates when parties wish to formalize an arrangement for settling outstanding debts. It serves as a crucial document for both individual and corporate debt resolutions, providing a legally sound framework under UAE law. The template incorporates essential elements required by UAE Federal Laws, including the Civil Code and Commercial Code, and can be adapted for various types of debt settlements, from personal loans to commercial obligations. It is particularly valuable in situations where parties seek to document a negotiated settlement amount, establish a structured payment plan, or formalize debt forgiveness terms. The document includes provisions for Islamic finance compliance where necessary and ensures enforceability in UAE courts. This template is commonly used by financial institutions, businesses, and individuals seeking to resolve debt obligations through formal settlement arrangements.

What sections should be included in a Debt Settlement Agreement?

1. Parties: Identification of the creditor and debtor with full legal names, addresses, and registration details if companies

2. Background: Details of the original debt, its origin, current amount, and any previous attempts at collection or settlement

3. Definitions: Key terms used throughout the agreement, including 'Settlement Amount', 'Original Debt', 'Payment Schedule', etc.

4. Settlement Amount: Clear statement of the agreed settlement sum and whether it represents a discount from the original debt

5. Payment Terms: Detailed payment schedule, method of payment, and bank account details

6. Representations and Warranties: Statements by both parties regarding their capacity, authority, and acknowledgment of the debt

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

8. Release and Discharge: Terms of final settlement and release of claims upon completion of payments

9. Governing Law and Jurisdiction: Specification of UAE law as governing law and jurisdiction of UAE courts

10. Notices: Process for serving formal notices between parties

11. Execution: Signature blocks and execution requirements

What sections are optional to include in a Debt Settlement Agreement?

1. Islamic Finance Compliance: Required when parties wish to ensure compliance with Shariah principles

2. Security Provisions: Include when additional security or guarantees are provided for the settlement amount

3. Confidentiality: Include when parties wish to keep the settlement terms private

4. Tax Implications: Include when settlement has significant tax consequences for either party

5. Third-Party Rights: Include when guarantors or other third parties are involved in the settlement

6. Force Majeure: Optional clause for unforeseen circumstances affecting payment capability

7. Arbitration Clause: Alternative dispute resolution mechanism if parties prefer arbitration over court proceedings

What schedules should be included in a Debt Settlement Agreement?

1. Payment Schedule: Detailed breakdown of payment dates, amounts, and installment structure

2. Original Debt Documentation: Copies of original loan agreements, promissory notes, or other debt evidence

3. Security Documents: Details of any collateral, guarantees, or security provided

4. Power of Attorney: If applicable, POA for executing the agreement or future actions

5. Bank Account Details: Specified account information for making payments

6. Corporate Authorizations: If parties are companies, board resolutions or other authorization documents

Authors

Alex Denne

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

Relevant legal definitions





































Clauses

































Relevant Industries

Banking & Financial Services

Legal Services

Real Estate

Construction

Manufacturing

Retail

Healthcare

Education

Hospitality

Professional Services

Trading & Commerce

Insurance

Telecommunications

Transportation & Logistics

Relevant Teams

Legal

Finance

Credit Control

Collections

Risk Management

Compliance

Treasury

Debt Recovery

Corporate Affairs

Banking Operations

Account Management

Restructuring

Relevant Roles

Legal Counsel

Finance Manager

Credit Controller

Collections Manager

Risk Manager

Compliance Officer

Chief Financial Officer

Treasury Manager

Debt Recovery Officer

Account Manager

Corporate Lawyer

Banking Officer

Financial Controller

Credit Risk Analyst

Legal Director

Settlement Officer

Restructuring Manager

Industries







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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