Debt settlement letter

Writing a good debt settlement letter is essential for a favorable outcome when negotiating with your creditors.

There are Attorneys and Debt Settlement Services that can help you with your negotiation if you prefer not to do it yourself.

These professionals are knowledgeable in their field, but their help can be expensive and unnecessary when small amounts of debt are to be negotiated.

Debts that are considered good candidates for settlement negotiation include: credit cards, medical bills, department store cards, student loans, personal loans, bounced checks, auto, home...

Things to keep in mind when negotiating debt settlement:

  • Avoid negotiating over the phone with your creditor.
  • Don't look too eager to settle.
  • Make it clear to the creditor that you intend to pay the debt.
  • Explain that you are unable to pay the debt due to (detail your hardship).
  • Begin your negotiation outrageously low, the creditor will counter your offer or, if you are lucky, might accept it.
  • Get your terms in writing before you send any payments.
  • Send your debt settlement letter via Return Receipt Requested
  • Keep a copy for your records.
  • Agree to send them cashiers check only after you receive their letter of agreement to free up your credit.
  • Request a deletion of their statement to your credit company.
  • If the information is not deleted it really does not help your score to pay it of the debt.

(Your name)
(City, State and Zip)
(Phone #)

(Collection Agency or Creditor's Name)
(City, State and Zip)

RE: Account #: (account or reference number)
Phone call on (date of call here) or
Collection letter dated (date of letter here)

Dear Mr./Ms. (Creditor's or Collection Agency's Name)

I, (your name), am writing this letter to show my intention to settle the delinquent account I have with (company name).

I do not agree that I owe as much as you have claimed and am willing to make an effort to save both of us a great deal of time and expense by offering to settle this account for $ _______.


By making ______ payments in the amount of $ ___________ every month/week.

As part of this settlement I am making the following requests:

Any ligitation is to be dropped.
My account will be shown paid in full.
All negative listings will be deleted from all three major credit bureaus.

If you accept my offer, please send written confirmation to my address listed above. Once I receive your confirmation, I will mail you a money order in the amount of _____________ (settlement amount) paid to _____________________________________ (creditor's name) within 3 business days.


Your Signature
Printed Name

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DISCLAIMER: The law will vary depending on your state, jurisdiction and the specifics of your case. The information provided by is intended for educational purposes only. The content on this site should NOT be considered professional legal advice or a substitute for professional legal advice. For such services, we recommend getting a free initial consultation by a licensed Attorney in your state.

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