Payment agreement

A payment agreement or payment agreement is a document by which the creditor and debtor reach an agreement to settle a debt.

Payment agreement

Payment agreements are common in those cases in which the person who owes money (debtor) has defaulted or has defaulted amounts of money to the person who claims the money (creditor).

The reason for the payment agreement is to establish new conditions that facilitate payment to the debtor. Thus, a priori, it is beneficial for the debtor since he faces better conditions. However, it is also beneficial to the creditor. Since, although it is true that the creditor must give in some clauses, given the financial situation of the debtor, he will be more likely to get his money back after signing the agreement. Consequently, some conditions of the original contract may disappear to make room for new ones included in the payment agreement.

As long as the parties sign it and, therefore, are in agreement, the document corresponding to the payment agreement has full legal effectiveness.

Characteristics of the payment agreement

A payment agreement must have a few essential parts. Since both parties are interested in the agreement, it is vitally important that the document is drafted according to the regulations so that it has full legal effectiveness. The essential elements of a payment agreement are:

  • Creditor and debtor data: The name and surname, as well as the national identity document must be present in the documents.
  • Clauses: The clauses or statements that modify or complete the original agreement must be established. Among them must be:
    • Amount of debt: The debtor must recognize the size of the debt. This amount may sometimes be less than what you actually owe. Everything, with the objective that the creditor can recover the maximum possible money.
    • Payment plan: Time, form and amount in which the payment will be made from that moment.
    • Additional: Clauses such as the elimination of default interest could be added if, as of said signature, the debtor satisfies all his installments as agreed. Too
  • Signatures: Both the creditor and the debtor must sign to show that they are satisfied with the payment agreement. In the event that any of the parties does not do so, the contract will be void since there is no consent between the parties.

Witnesses may be required to attest that the contract has indeed been signed and both parties are in agreement.


Next, as an example, we are going to develop a payment agreement template. Although this model includes everything that is essential for the contract to become effective, we are aware that each case is different and unique. For this reason, it is advisable for everyone to add the clauses that suit their situation and, furthermore, to consult a lawyer to confirm that all the clauses are written correctly.

On the one hand, Ms. Francisca García López, with ID XXXXXXX and as lender, hereinafter as Creditor, and Mr. Manuel Rodríguez Caser, with ID YYYYYYY as borrower, hereinafter as Debtor, through this document, hereinafter Agreement, they sign the following clauses that modify the original debt contract between the parties:

First: The Debtor acknowledges that the total debt owed to the Creditor amounts to 3,000 US dollars.

Second. The Debtor admits having breached his obligation and payment. Consequently, and in order that the Debtor can satisfy his debt to the Creditor, the following payment plan is established:

  • The payment of 30 installments of 100 US dollars, at the rate of one per calendar month, counting from the month following the moment this Agreement is signed.
  • The way in which the payment has to be made will be by bank transfer to the account number BBBBBB whose owner is the Creditor.
  • The payment of each installment, in the manner indicated, must be made in the first five business days of the corresponding month.

Third: As of the moment this Agreement is signed, each and every one of the default interest accumulated to date by the Debtor will be eliminated. Remaining, therefore, the amount of the debt in the amount set in the first clause.

Fourth: If the Debtor, from the date the Agreement is signed, fails to meet its payment obligations again, the default interest will begin to accrue again starting from zero.

Both parties agree and, by signing, declare their consent on the 10th day of the 20th month of the year 20XX.

Mrs. Francisca García López with ID XXXXXXX, Creditor


Don Manuel Rodríguez Caser with DNI YYYYYYY. Debtor