Assumption of Debt Agreement

Assumption of debt – professional template in Word format

Assumption of debt is a transaction by which another person takes the place of the existing debtor, who is thereby released from the obligation towards the creditor. Two related institutes are often confused with it in practice – accession to debt, where the new obligor joins the existing one as a joint and several debtor, and assumption of performance, which remains purely an internal arrangement between the debtor and a third party. This template contains all three forms.

Changes on the debtor’s side are governed by the Obligations Act (Zakon o obveznim odnosima). The key difference compared with an assignment of receivables is consent – while the creditor may change without asking the debtor, the debtor cannot change without the creditor’s consent. That is why the assumption of debt form also provides for the creditor’s signature, and without it the contract operates only as an assumption of performance.

Key features

• Professional template – three separate contracts in one file, drawn up in line with the provisions of the Obligations Act (Zakon o obveznim odnosima).
• Practical reliability – each form expressly states who is released from the obligation, who remains bound and whose consent is required.
• Easy customisation – you fill in the details of the parties and the identification of the debt, and simply delete the forms you do not use.
• Digital availability – the DOCX file with instructions arrives by e-mail immediately after purchase, ready for printing and signing.

What the template includes

• Form A – an assumption of debt agreement between the debtor, the party assuming the debt and the creditor giving consent
• A provision that the party assuming the debt is entitled to all defences arising from the legal relationship from which the debt stems
• An article on the creditor’s consent and on the effect of the contract until the creditor gives consent
• An article on ancillary rights – guarantees and pledges given by third parties cease if those parties do not consent to remain liable for the new debtor as well
• Form B – an accession to debt agreement between the creditor and the acceding party, with joint and several liability and without the need for the debtor’s consent
• Form C – an assumption of performance agreement, with a deadline and an IBAN for payment to the creditor and liability for damage if the debt is not settled on time
• An optional provision on the basis for the assumption of performance, where the party assuming it is itself indebted to the debtor
• Fields for precise identification of the debt – basis, amount, interest, maturity and the creditor’s details with the OIB (personal identification number)

We have explained the differences between the three institutes and the typical situations in which they are used in our guide on assumption of debt. If the creditor changes rather than the debtor, use the assignment of receivables agreement, and for mutual debts see also the set-off template.