Debt is considered substantially modified and treated like a settlement when the following exists: (2 The renegotiated rate under the new terms is always less than the original terms of the debt. (2 The renegotiated rate under the new terms is substantially different from the original terms of the debt. (2) The renegotiated rate under the new terms (5 always higher than the original terms of the debt. The discounted present value under the new terms is at least 10% different from the discounted present value of the remaining cash flows under the old debt, or if there is a change in creditor and the original debt is legalby discharged. elextbook and Media