Examples of Settlement Agreements

Written by david montoya
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Examples of Settlement Agreements
Settlement agreements help keep the court system from being overburdened with cases. (US Supreme Court image by dwight9592 from Fotolia.com)

When you think of court cases, images of dramatic testimony, compelling evidence and a surprise jury verdict come to mind. In reality, this exciting view of the legal system just doesn't happen much. More often than not, the parties to a case decide to settle to avoid the pressure and costs of litigation. A settlement agreement is formed when the two opposing sides come to an understanding outside of the courtroom and contract for a certain amount to be paid; this effectively ends the dispute.

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Divorce Settlement Agreements

Divorce proceedings are one of the most volatile types, simply because of the emotions involved. This makes the use of the settlement agreement an important asset in avoiding a drawn-out and emotionally charged court case that will decide how to divide up marital property. In a divorce settlement agreement, the former husband and wife come to an agreement on how to divide the marital property, since some property cannot reasonably be split. For example, it is easy to split the earnings in a joint bank account but impossible to split a house or a car. Someone will have to get these items at the expense of the other. The divorce settlement agreement essentially allows both sides to bargain. For example, they can agree that if one party gets the house, the other party gets the car. This agreement will stand even if the two items are not equal in value. All the marital property can be divided in this manner.

Debt Settlement Agreements

A debt settlement agreement is a negotiation between a person with significant debts and his creditors. In this situation, the debtor owes more than he can afford to pay back. The creditors will come to an agreement with the debtor to settle the debt for a lesser amount. This helps both the parties in two ways. First, as stated before, the agreement helps both parties avoid the costly nature of litigation. Second, the creditor will get paid as much as possible, and the debtor will not be required to pay more than he is able. If the debtor has no money and owns very little property, there is very little for the creditor to take to satisfy the debt. A settlement agreement can require that the debt is paid in small amounts over time.

Car Insurance Settlement Agreements

If you're like most drivers, you've probably been in at least a small fender bender and know the standard drill of exchanging information and contacting your insurance provider. What you may not know is that your insurance provider will contact the other party's insurance provider to negotiate a settlement agreement regarding who was at fault and how much should be paid in damages. The insurance companies will go to court if no agreement can be made. However, the prospect of long and costly litigation is usually enough for both sides to come to a binding agreement (to which you are also bound). The insurance companies often decide percentage of fault and damages as a settlement to avoid court.

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