Composition with Creditors is an agreement between Contractors-Debtor and Subcontractors-Creditors to settle a debt. This type of agreement is often used in cases where the debtor is unable to pay off the full amount owed to the creditor and instead offers an alternative payment agreement. The creditor agrees to accept a lower amount than what is owed in exchange for a full and final settlement of the debt. This type of agreement is also known as a "debt composition". There are two types of Composition with Creditors agreements: voluntary and involuntary. In a voluntary agreement, both parties agree to the terms of the agreement. In an involuntary agreement, the creditor agrees to the terms without the consent of the debtor.
Composition with Creditors -- Agreement between Contractors-Debtor and Subcontractors-Creditors
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State:
Multi-State
Control #:
US-0930BG
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Word;
Rich Text
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Description
A composition agreement is an agreement made between an embarrassed or insolvent debtor and two or more of his creditors that each of the creditors entering into the agreement will be paid a specified amount, less than the whole of their claims, and the creditors agree to accept such payment in full satisfaction of their claims. The agreement works substantially an accord for which the consideration is the satisfaction to be made by the debtor, and such an accord is no bar to suit on the original debt, unless the satisfaction is performed.
Composition with Creditors is an agreement between Contractors-Debtor and Subcontractors-Creditors to settle a debt. This type of agreement is often used in cases where the debtor is unable to pay off the full amount owed to the creditor and instead offers an alternative payment agreement. The creditor agrees to accept a lower amount than what is owed in exchange for a full and final settlement of the debt. This type of agreement is also known as a "debt composition". There are two types of Composition with Creditors agreements: voluntary and involuntary. In a voluntary agreement, both parties agree to the terms of the agreement. In an involuntary agreement, the creditor agrees to the terms without the consent of the debtor.
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