The Debt Settlement Agreement Letter is a crucial document used in Indonesian business and personal financial transactions when parties wish to formally resolve outstanding debt obligations. This document, governed by Indonesian law, particularly the Civil Code (KUHPerdata) and Law No. 37 of 2004 regarding Bankruptcy and Suspension of Debt Payment Obligations, serves as a legally binding record of the agreed terms for debt settlement. It is commonly used when parties have negotiated a settlement amount that differs from the original debt, when establishing payment installments, or when formalizing debt forgiveness terms. The letter should include specific details about the original debt, settlement terms, payment schedules, and release clauses, all while complying with Indonesian legal requirements for document execution and stamping. This document is particularly important in Indonesia's business environment, where formal documentation of financial arrangements is essential for legal certainty and enforcement.
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1. Letter Header: Date, reference number, and formal letter heading
2. Parties' Information: Complete details of creditor and debtor, including names, addresses, and any reference numbers
3. Subject Line: Clear indication that this is a Debt Settlement Agreement Letter
4. Debt Acknowledgment: Statement of the original debt amount, date incurred, and current outstanding balance
5. Settlement Terms: Detailed outline of the agreed settlement amount and payment terms
6. Payment Method: Specific details of how and where payments will be made
7. Timeline: Clear deadlines and dates for payment completion
8. Release Clause: Statement confirming full settlement of debt upon completion of payments
9. Breach Consequences: What happens if payment terms are not met
10. Closing: Formal closing statement requesting acknowledgment and acceptance
11. Signature Blocks: Space for both parties to sign and date the agreement
1. Previous Payment History: Include when there's a history of partial payments that needs to be acknowledged
2. Third-Party Guarantor: Include when a guarantor is involved in the settlement
3. Confidentiality Clause: Include for settlements involving sensitive business information
4. Tax Implications: Include when settlement has significant tax consequences that need to be addressed
5. Dispute Resolution: Include for larger debts where formal dispute resolution process might be needed
6. Witness Section: Include when local practice or size of debt requires witness signatures
1. Schedule A - Debt Breakdown: Detailed breakdown of the original debt, including principal, interest, and any penalties
2. Schedule B - Payment Schedule: Detailed payment plan showing installment amounts and due dates
3. Schedule C - Supporting Documents: List of original debt documentation, previous correspondence, and other relevant documents
4. Appendix 1 - Bank Details: Complete banking information for payment processing
5. Appendix 2 - Power of Attorney: If applicable, authorization documents for representatives signing on behalf of either party
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