Payment Plan Agreement Template

PAYMENT PLAN AGREEMENT TEMPLATE FAQ

What is a payment plan agreement?

A Payment Plan Agreement is a written agreement where a debtor agrees to repay an outstanding balance over time in scheduled installments. It outlines the total amount owed, installment amounts, due dates, payment methods, and what happens if a payment is missed.

When should you use a payment plan agreement?

Use it when a customer, tenant, or borrower cannot pay a full balance at once and both parties want a clear schedule. It is common for past-due invoices, medical bills, service balances, rent arrears, and personal loans.

Should the agreement include interest or late fees?

It can, if allowed by law and your underlying contract. The agreement should clearly state any interest rate, late fees, and how they are calculated. If you’re unsure, you can keep the agreement “no interest” and include only a late fee.

What happens if the debtor misses a payment?

Many agreements allow a grace period, late fee, and a default clause. Some include an acceleration clause making the remaining balance due immediately. This template includes options you can customize.

Do you need collateral or a guarantor?

Not always. For higher amounts, a creditor may request collateral, a personal guarantee, or automatic payments. This template includes optional sections for security/collateral and a guarantor.

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