Word that means “to call it even”?

Question

One person has a debt to another.

The other person runs a debt to the first person, so instead of exchanging money, they (insert word here) the debt.

The phrase is to "call it even". I'm looking for this, but in verb-form.

Answer 1

Another expression is "to forgive a debt." Hence, "they agreed to forgive the debt," or "John agreed to forgive Jim's debt." See Matthew chapter 18, verse 27, in the New American Standard Bible. Matthew, by the way, is the first book in the New Testament.

Answer 2

Cancel the debt or nullify the debt come to mind.

The Corpus of Contemporary American English has these cites:

• In the best known application of this device, a conservation organization acquires some of a developing country's foreign debt, either by purchasing it at a discount from the debt's face value or by receiving it as a donation. The organization then agrees to cancel the debt in return for the borrower country's commitment of additional resources to local conservation.

• I recalled my old daydream that she would cancel the debt when I married, or after my first child was born.

Answer 3

Legally, this might be setting off one debt against the other.