Deed of Debt Forgiveness
A Deed of Debt Forgiveness may be used by a lender to forgive a debt owed by a borrower.
Last updated October 24, 2025
Suitable for Australia
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Frequently asked questions
What does the Deed of Debt Forgiveness cover?
- Terms and conditions concerning forgiveness of the debt.
- Taxation.
- Confidentiality.
- The effective date of forgiveness.
What are the benefits of having a Deed of Debt Forgiveness?
A Deed of Debt Forgiveness is beneficial for both the debtor and the creditor because it can:
- Provide clarity and certainty about the release of the debt, ensuring that both the debtor and the creditor understand the terms of the forgiveness, particularly in case of potential future disputes.
- Grant financial relief by eliminating debt that may be causing financial hardship.
- Provide legal protection for both the debtor and the creditor by ensuring that the debt is formally cancelled and that there can be no future claims or legal action related to the forgiven debt.
- Maintain a positive relationship between the debtor and the creditor. By formalising the forgiveness of the debt, it can demonstrate goodwill and a willingness to work together in the future.
View Sample Deed of Debt Forgiveness
The Legal Risk Score of a Deed of Debt Forgiveness Template is Medium
Our legal team have marked this document as medium risk considering:
- There is a risk that the borrower might misunderstand the scope of the forgiveness, as the document specifies that only the debt under a particular agreement is forgiven, leaving other debts potentially enforceable.
- The deed has specific signature requirements.
- The confidentiality clause restricts the sharing of information about the deed's terms, which could complicate the borrower's ability to freely discuss or disclose the terms when seeking advice or complying with regulatory requirements.
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