To assume debt is to take on a debt that previously was owned by someone else with the obligation to eventually pay it off. Most lenders will not allow you to do this except in the case of the death of an original debtor to whom you were married. In such a case, the lender will generally provide you with a contract to sign. In private debt, however, you can make your own rules, which involves writing up your own contracts.
Draw up a contract, beginning with the date and names of the parties involved. A contract of assumption of debt always involves three parties: the creditor, the debtor and the customer. The debtor assumes the customer's debt.
Write the main statements of the agreement, declaring the current state of affairs, including the exact amount owed. State that you, the debtor, agree to assume the customer's debt, and that you now owe the creditor the amount in question.
Enter the terms of payment, such as how long you have to pay off the debt and any interest involved. This will vary from contract to contract and is contingent upon the decision made between you and the creditor.
Sign the contract. To be binding, the contract must be signed by all three parties and witnesses.
- debt defined image by Christopher Walker from Fotolia.com