oboloo Glossary

Debt Payment Agreement

oboloo Glossary

Debt Payment Agreement

A Debt Payment Agreement (DPA) is a legally binding contract between a debtor and creditor, providing a structured approach to resolving the debt. It is an alternative to insolvency proceedings if creditors decide that it is in their best interests to enter into such an agreement. Under the terms of a DPA, the debtor agrees to repay their outstanding debt over an agreed period of time in accordance with certain conditions set out in the agreement. This could include regular, timely payments to all creditors, as well as possible changes to terms or interest rates which make repayment more manageable for the debtor. By entering into a DPA, creditors are able to safeguard their interests while encouraging the debtor to maintain their financial commitment and reputation.