Free template · Updated October 18, 2026

Payment Agreement template

A payment agreement records an existing debt, the debtor's acknowledgment of the balance, an installment schedule, interest and late fees if any, what counts as default, and the creditor's promise to hold off collection while payments are made.

A payment agreement (or payment plan agreement) is a contract in which a debtor acknowledges an amount already owed, such as unpaid invoices, a purchase price, past-due rent, or damages, and the creditor agrees to accept it in installments on a fixed schedule instead of demanding it all at once. You need one when someone can't pay a bill in full and you'd rather be paid over time than chase the whole amount.

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1. Parties

This Payment Agreement (the "Agreement") is made on [DATE] between [CREDITOR NAME], of [CREDITOR ADDRESS] (the "Creditor"), and [DEBTOR NAME], of [DEBTOR ADDRESS] (the "Debtor"), together the "Parties".

2. Acknowledgment of the Debt

The Debtor acknowledges that, as of [DATE], it owes the Creditor [TOTAL AMOUNT AND CURRENCY] (the "Balance") for [ORIGIN OF THE DEBT, e.g. unpaid invoices nos. 1041–1046 under the service agreement dated DATE / the purchase price of ITEM sold on DATE / unpaid rent for MONTHS at ADDRESS]. The Debtor confirms that the Balance is correct and not subject to any offset, counterclaim, or dispute, except: [EXCEPTIONS, or NONE].

3. Payment Schedule

The Debtor will pay the Balance as follows: an initial payment of [AMOUNT, or NONE] on [DATE]; then [NUMBER] [WEEKLY / MONTHLY] installments of [AMOUNT], due on [DAY] of each [WEEK / MONTH], starting [FIRST DUE DATE]; with a final payment of all remaining amounts on [FINAL DUE DATE]. The full schedule is set out in Exhibit A. Payments will be made by [BANK TRANSFER / CARD / CHECK / OTHER] to [PAYMENT DETAILS].

4. Interest

[CHOOSE ONE: (a) No interest will be charged on the Balance if all payments are made on time; or (b) the unpaid Balance bears interest at [RATE]% per year, simple interest, from [DATE].] In no event will interest or any other charge exceed the maximum permitted by applicable law; any excess will be applied to reduce the Balance.

5. Application of Payments and Prepayment

Each payment is applied first to any late fees, then to accrued interest (if any), and then to the Balance. The Debtor may pay all or part of the remaining Balance early at any time without penalty. An early payment reduces the Balance but does not postpone the next installment unless the Creditor agrees in writing.

6. Late Payment

A payment is late if it is not received within [NUMBER] days after its due date (the "Grace Period"). For each late payment, the Debtor will pay a late fee of [AMOUNT OR PERCENTAGE OF THE MISSED INSTALLMENT], to the extent permitted by law. A returned or declined payment counts as not made, and the Debtor will also pay any bank charge it causes, up to [AMOUNT].

7. Creditor's Forbearance

As long as the Debtor makes each payment on time and complies with this Agreement, the Creditor will not start legal proceedings, refer the Balance to a collection agency, or report it as delinquent to any credit bureau [OPTIONAL: and will resume providing GOODS / SERVICES / ACCESS on the terms in DOCUMENT]. Nothing in this Agreement waives the Creditor's rights if the Debtor defaults.

8. Default

The Debtor is in default if: (a) any payment is not made by the end of its Grace Period; (b) the Debtor becomes insolvent, makes an assignment for the benefit of creditors, or becomes subject to bankruptcy proceedings; (c) the Debtor [SELLS OR TRANSFERS THE PURCHASED ITEM / CLOSES ITS BUSINESS] before the Balance is paid; or (d) any statement in section 2 proves to be untrue.

9. Notice to Cure and Acceleration

If the Debtor defaults under section 8(a), the Creditor will send written notice, and the Debtor will have [NUMBER] days from that notice to pay all overdue amounts. If the Debtor does not cure in time, or if any other default occurs, the Creditor may by written notice declare the entire unpaid Balance, accrued interest, and late fees immediately due, and may pursue any remedy available by law. To the extent permitted by law, the Debtor will pay the Creditor's reasonable costs of collection, including legal fees.

10. Security and Guarantee (Optional)

[OPTIONAL: To secure the Balance, the Debtor grants the Creditor a security interest in [COLLATERAL DESCRIPTION], and the Creditor may file any notice needed to make that interest effective against third parties. / [GUARANTOR NAME] guarantees payment of the Balance and signs below to confirm.] [DELETE THIS SECTION IF NOT USED.]

11. Payment in Full

When the Creditor has received the full Balance and any amounts due under this Agreement, the Creditor will confirm in writing within [NUMBER] days that the debt described in section 2 is paid in full, [OPTIONAL: and will release any security interest and correct any adverse credit report it made]. [OPTIONAL, FOR A REDUCED SETTLEMENT: The Creditor agrees to accept [REDUCED AMOUNT] in full satisfaction of the Balance, but only if every payment is made on time; if the Debtor defaults, the full Balance in section 2, less payments made, becomes due.]

12. General Terms

This Agreement is governed by the laws of [GOVERNING LAW JURISDICTION]. It is the entire agreement between the Parties about the payment of the Balance and may be changed only in writing signed by both Parties. Any delay by the Creditor in enforcing a right is not a waiver of it, and accepting a late payment does not waive any later default. If any provision is held invalid, the rest remains in effect. Notices must be sent to the addresses above or to [EMAIL ADDRESSES]. The Parties agree that this Agreement may be signed electronically and in counterparts, each of which is an original and all of which together form one agreement.

13. Signatures

CREDITOR: [CREDITOR NAME] Signature: ____________________ Name and title (if a company): [SIGNATORY NAME, TITLE] Date: [DATE] DEBTOR: [DEBTOR NAME] Signature: ____________________ Name and title (if a company): [SIGNATORY NAME, TITLE] Date: [DATE] GUARANTOR (if any): [GUARANTOR NAME] Signature: ____________________ Date: [DATE]

Our take: Our take: pick the document by asking where the money came from. If you are handing someone new money, use a promissory note for a simple one-page promise to repay, or a loan agreement when the loan is larger, has conditions, or is secured. If the debt already exists, because a client didn't pay, a buyer is paying off a price, or a dispute was resolved for a sum, use this payment agreement: it records the amount owed, why it is owed, the schedule, and what the creditor gives up in return (usually pausing collection while the plan is honored). Two things make it work. First, the acknowledgment: get the debtor to confirm the balance in writing so the plan can't later turn into an argument about the amount. Second, the default clause: give a short grace period and a written notice to cure, then let the full balance become due. Keep late fees and any interest modest; many US states cap interest and late charges, and the limits differ by state and by type of debt. If you regularly offer consumers installment plans with a finance charge or more than four installments, federal Truth in Lending rules may apply, and anyone collecting consumer debts owed to someone else must follow the Fair Debt Collection Practices Act, so check with a lawyer before you scale this up. If the plan settles a dispute, pair it with a settlement agreement that contains the release.

When should you use a payment agreement?

When a client or customer can't pay an overdue invoice in full
When a buyer pays the purchase price of a business, vehicle, or equipment in installments after taking it
When a tenant agrees to catch up on past-due rent over several months
When a dispute ends with one side owing a sum it will pay over time
When you want a written acknowledgment of a debt before agreeing to wait for payment

How do you fill in this template?

Reconcile the account first, then write the exact balance and where it came from in section 2, with invoice numbers or dates.
Build the schedule in Exhibit A as a table of due dates and amounts, and check that the installments add up to the balance.
Choose interest or no interest, set a grace period and late fee, and check your state's limits on interest and late charges.
Decide what you'll offer in return in section 7, and whether a reduced settlement or a guarantor applies; delete the options you don't use.
Upload the agreement to eSignSimple, save it as a template if you set up payment plans often, and send it to the debtor (and any guarantor) for e-signature before the first installment is due.

How do you get it signed online?

Save it as Word or PDF. Paste the filled-in text into Word or Google Docs and keep it as a .docx file, or export it as a PDF. eSignSimple accepts both, plus DOC, ODT and RTF, up to 25 MB; Word files are converted to PDF on upload.
Upload and place the fields. Sign up with Google, upload the file and drag signature, initials, date and text fields onto the page for each signer. Set a signing order if one party must sign first.
Send it for signature. Each signer gets a private link and signs in the browser without creating an account. Automatic email reminders go out every three days (up to three) until everyone has signed.
Keep the signed copy. When the last person signs, everyone can download the final PDF with a certificate of completion, an audit trail and a SHA-256 fingerprint you can verify later.

Signing on your own device only? The guide to signing a PDF covers the free built-in options, and the security page explains how signed files are stored and verified.

This template is general information, not legal advice. Laws differ by country and state; have a lawyer review contracts with high stakes.

Written by Buğra Sözeri, founder and editor, eSignSimple · Last reviewed October 18, 2026

Buğra builds eSignSimple and writes and maintains its guides. He researches each legal page against the official texts linked on it and updates pages when the law or the product changes. He is not a lawyer, and nothing here is legal advice. About eSignSimple

Frequently asked questions

What is the difference between a payment agreement and a promissory note?

A promissory note is usually the borrower's promise to repay money just lent. A payment agreement deals with a debt that already exists, records the debtor's acknowledgment of it, and sets out what the creditor agrees to in return, such as pausing collection. Both can use installments.

Can I charge interest or late fees on a payment plan?

Often yes, within limits. Many US states cap interest and late charges, and the limits differ by state and by type of debt, so check the rules where the debtor is located before filling in sections 4 and 6.

What happens if the debtor misses a payment?

Under this template, the debtor gets a grace period, then a written notice and a short time to catch up. If they don't, the creditor can demand the whole remaining balance at once, which is called acceleration.

Can a payment agreement be signed electronically?

In most cases, yes. In the US, the ESIGN Act and UETA generally give e-signatures the same effect as handwritten ones for contracts like this. eSignSimple keeps an audit trail showing who signed and when.

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