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Debt Clearance Letter

Debt Clearance Letter Template for Malaysia

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Key Requirements PROMPT example:

Debt Clearance Letter

"I need a Debt Clearance Letter for a corporate loan of RM 500,000 that will be fully settled by March 15, 2025, issued by Malaysia Banking Berhad to confirm full discharge of all obligations under Facility Agreement reference MBB2023/1234."

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Document background
The Debt Clearance Letter is a crucial document in Malaysian business and financial transactions, serving as official confirmation that a debt has been fully satisfied. It is typically issued when a borrower has completed all payment obligations and requires formal documentation of the debt clearance. The letter provides legal protection for the debtor against future claims related to the same debt and helps maintain clear financial records. Under Malaysian law, particularly the Contracts Act 1950 and Financial Services Act 2013, this document needs to contain specific elements to be legally valid, including clear identification of parties, debt details, and explicit confirmation of settlement. The letter is commonly used in various scenarios, from personal loan clearances to corporate debt settlements, and may be required for credit reporting purposes or future financial transactions.
Suggested Sections

1. Letter Header: Date, reference number, and formal letterhead of the creditor

2. Addressee Details: Full name and address of the debtor

3. Debt Reference Information: Original loan/debt account numbers, dates, and initial amount

4. Confirmation of Payment: Clear statement confirming that the debt has been fully settled

5. Release Statement: Formal declaration that the debtor is released from all obligations related to the specified debt

6. No Further Claims: Statement confirming that no further claims will be made regarding this debt

7. Authorization: Details of the authorized signatory from the creditor organization

Optional Sections

1. Payment History Summary: Used when there's a complex payment history that needs to be documented

2. Conditional Release Clauses: Include when the clearance is subject to specific conditions (e.g., check clearance)

3. Related Account References: When the clearance affects multiple related accounts or debt instruments

4. Third Party Authorization: When the letter is issued to a third party acting on behalf of the debtor

5. Partial Settlement Terms: When the clearance is based on an agreed partial settlement

6. Future Credit Reference Statement: Statement about updating credit reference agencies, if applicable

Suggested Schedules

1. Payment Evidence: Copies or details of final payment transaction(s)

2. Original Debt Documentation: Reference to or copy of original loan agreement or debt instrument

3. Settlement Calculation: Detailed breakdown of how the final settlement amount was calculated

4. Authorization Documents: Copies of power of attorney or authorization letters if involving third parties

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈË°æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
Relevant legal definitions


















Clauses
















Relevant Industries

Banking

Financial Services

Insurance

Real Estate

Retail

Manufacturing

Construction

Healthcare

Education

Telecommunications

Professional Services

Utilities

Relevant Teams

Finance

Legal

Compliance

Credit Control

Collections

Accounts Receivable

Treasury

Risk Management

Corporate Secretariat

Operations

Relevant Roles

Chief Financial Officer

Finance Manager

Credit Controller

Accounts Receivable Manager

Collections Manager

Legal Counsel

Compliance Officer

Financial Controller

Treasury Manager

Debt Recovery Officer

Risk Manager

Account Manager

Corporate Secretary

Financial Analyst

Credit Risk Officer

Industries






Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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