Discounted Payoff Agreement for New Zealand

Discounted Payoff Agreement Template for New Zealand

A comprehensive legal document governed by New Zealand law that formalizes an agreement between a creditor and debtor to settle an outstanding debt for less than the full amount owed. The agreement outlines the original debt amount, the agreed discounted settlement amount, payment terms, and conditions for the discharge of the debt. It includes provisions for default, confidentiality, and release of obligations, ensuring compliance with New Zealand's Contract and Commercial Law Act 2017, Credit Contracts and Consumer Finance Act 2003, and other relevant legislation. The document provides legal certainty for both parties and establishes a binding framework for resolving the debt obligation.

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What is a Discounted Payoff Agreement?

The Discounted Payoff Agreement is a crucial document used when a creditor agrees to accept a reduced payment to settle an outstanding debt in full. This type of agreement is commonly used in New Zealand's financial and commercial sectors when a debtor is unable to pay the full amount owed, but the creditor prefers to recover a portion of the debt rather than pursue full collection or legal action. The document must comply with New Zealand's financial and consumer protection laws, including the Credit Contracts and Consumer Finance Act 2003 and the Fair Trading Act 1986. It typically includes details of the original debt, the discounted amount, payment terms, conditions for settlement, and the consequences of default. This agreement provides legal protection for both parties and ensures clear documentation of the debt settlement terms, making it particularly valuable in situations involving significant debt amounts or complex payment arrangements.

What sections should be included in a Discounted Payoff Agreement?

1. Parties: Identifies and defines the creditor and debtor

2. Background: Outlines the existence of the original debt, previous payment history, and context for the discounted payoff arrangement

3. Definitions: Defines key terms used throughout the agreement

4. Original Debt Acknowledgment: States the original debt amount and its origins

5. Settlement Amount: Specifies the agreed discounted payment amount

6. Payment Terms: Details the payment method, due date, and any installment arrangements

7. Settlement Conditions: Outlines conditions that must be met for the settlement to be valid

8. Release and Discharge: Confirms that payment of the settlement amount will fully discharge the debt

9. Default Provisions: Specifies consequences if settlement payment terms are not met

10. Confidentiality: Requirements for keeping the settlement terms confidential

11. Entire Agreement: Confirms this agreement supersedes all previous arrangements

12. Governing Law: Specifies New Zealand law governs the agreement

13. Execution: Signature blocks and execution requirements

What sections are optional to include in a Discounted Payoff Agreement?

1. Security Release: Required if the original debt was secured against assets or property

2. Tax Acknowledgments: Include when there are significant tax implications from the debt forgiveness

3. Credit Reporting: Include when there are agreements about how the debt will be reported to credit agencies

4. Third Party Rights: Include when guarantors or other third parties are involved

5. Installment Schedule: Include when the settlement amount is to be paid in installments rather than lump sum

6. Dispute Resolution: Include when parties want to specify particular dispute resolution procedures

7. Further Assurance: Include when additional documentation or actions may be required post-settlement

What schedules should be included in a Discounted Payoff Agreement?

1. Schedule 1 - Debt Details: Detailed breakdown of the original debt, including dates, amounts, and interest

2. Schedule 2 - Payment Schedule: If applicable, detailed schedule of installment payments including dates and amounts

3. Schedule 3 - Security Details: If applicable, details of any security arrangements to be released

4. Appendix A - Original Loan Documentation: Reference copies of original loan or credit agreements

5. Appendix B - Payment Instructions: Detailed payment instructions and bank account details

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

Jurisdiction

New Zealand

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions
Relevant Industries

Banking & Financial Services

Debt Collection & Recovery

Credit Management

Consumer Finance

Commercial Lending

Retail

Professional Services

Property & Real Estate

Manufacturing

Healthcare

Relevant Teams

Legal

Finance

Credit Management

Collections

Risk Management

Compliance

Treasury

Account Management

Debt Recovery

Settlement Administration

Relevant Roles

Credit Manager

Collections Manager

Financial Controller

Risk Manager

Legal Counsel

Debt Recovery Specialist

Account Manager

Settlement Officer

Compliance Officer

Chief Financial Officer

Credit Analyst

Relationship Manager

Recovery Manager

Finance Director

Treasury 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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