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Adjustment is a settlement, allowance, or deduction made on a debt or claim that has been objected to by a debtor or creditor in order to establish an equitable arrangement between the parties.  

For tax returns, an IRS-approved change to tax liability is considered an adjustment. 

When money is owed to a lender, debt adjustments are made by creditors or judges who exempt debtors from a part of their obligation, in light of ongoing circumstances; like insolvency

In insurance law, an insurance company’s settlement on a claim is referred to as an adjustment. The company’s adjustment reflects the sum of money the company is willing to pay on behalf of a claimant after negotiation and consideration of the parties’ gains, losses, and rights. 

Set-offs, contributions, and subrogation are also examples of adjustments.  

A set-off is a statutory defense to all or a part of a plaintiff’s monetary claim. It also refers to the adjustment of losses against profit or income by a taxpayer in a particular tax year. 

A contribution is a payment made between defendants with joint and several liabilities in order to apportion, or adjust, for liability. 

Subrogation is the substitution of one person or group in the place of another with reference to a lawful claim, demand, or right, whereby the subrogating party assumes the rights and duties of the original party. 

[Last updated in June of 2021 by the Wex Definitions Team]