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This Letter allows a creditor to either forgo a debt or extend the time the debt will be repaid by the debtor. A creditor is a party that has lent money or is being owed a sum of money, while a debtor is a party that owes the creditor a specific amount of money. The creditor can be a financial institution, such as a bank, a moneylender, or any private individual or organization that the debtor owes money.
Under normal circumstances, a debtor is required to repay their debt on the date and under the terms specified in the Loan Agreement, Promissory Note, or any other agreement or arrangement made with the creditor. However, in some situations, the creditor may decide to give the debtor more time to repay their debt or forgo the debt altogether.
Therefore, this letter can be used in two separate ways: the first being that a creditor may use the letter to grant a debtor an extension of time to repay their debt. Secondly, a creditor may also use this document to waive a debt. To waive a debt means that the creditor is giving up their right to collect the money owed. This means that the debtor will no longer be required to repay their debt. Note that this document usually follows a debtor's Request Letter for Extension of Time to Pay Debt to inform the debtor that their request for extension has been granted.
How to use this document
This document outlines the amount owed, the date the debt was supposed to be due, and the new date or time frame within which payment should be made (if it is an extension of time). After completing this document, it should be printed and signed by the creditor. If the creditor is a company or an organization, an officer of that organization, such as a director, may sign this letter on behalf of the organization.
A signed copy of this letter should be delivered either in letter form or via email to the debtor. The creditor should keep at least one copy for record purposes.
There is no specific law that mandates a creditor to waive a debt. However, the Money Lender Act and Money Lender Laws of the various states in Nigeria regulate loan transactions in Nigeria.
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