A debt compromise agreement is an arrangement between a borrower and lender that attempts to strike a balance between their interests. The borrower pays less than the principal amount owed, while the lender might agree to extend the repayment term or waive some fees. This type of agreement is often used in cases where the borrower is unable to pay the full amount due to hardship or other extenuating circumstances. It’s important to note that debt compromise agreements aren’t applicable to all lenders – they must be officially negotiated and agreed upon before any agreement can be made official.