Being able to use our sample settlement of debt letter puts you squarely on the path to getting out of debt. But, first, you really need to evaluate your finances, and understand what you can and cannot afford to do, before you make an offer to a creditor. This free help writing a debt settlement letter will help you with negotiating debt settlements.
It is essential for you to maintain the payment plan if the creditor accepts your offer.
Make sure you have a budget set up, reasonable expenditures, and track inflow and outflow, so you can offer these details should the creditor ask for it.
What you will find on this page:
- How to prepare to write your letter.
- Why write a debt settlement request letter?
- What is included in our Sample Settlement Of Debt Letter.
- Helpful tips for writing a debt settlement letter.
- Free sample Settlement of Debt Letter (s) and Agreement.
- Spread the word.
- Learn more…
How to Prepare to Write Your Letter
Make sure you have a budget set up, reasonable expenditures, and track inflow and outflow, so you can offer these details should the creditor ask for it.
Why Write a Debt Settlement Request Letter?
Writing a debt settlement letter is a professional way of negotiating with creditors when you are having difficulty meeting your financial obligations.
Whether it is overwhelming credit card debt or an inability to make your loan payments, financial delinquency is very stressful and can really hurt your credit score. If you find yourself in this position, you are not alone.
These statistics show that sometimes even the most financially responsible people encounter problems beyond their control and are in need of some debt relief.
Our sample settlement of debt letter is a good tool to use when trying to find a solution that will help you avoid bankruptcy and protect your credit rating. It is a professional approach in letting creditors know that you are having difficulty paying your bills and would like to propose a plan for repaying a reduced balance.
What Is Included In Our Sample Settlement Of Debt Letter
- Benefits to Creditor. The purpose of debt settlement legal letters is to convince the creditor that it would be in their best interest to reach an agreement with you. Avoid making the letter personal and don’t make the mistake of trying to use your situation to get sympathy. While a creditor may understand what you are going through, money is their primary concern. Your letter will be much more effective if you are upfront with them and tell them exactly where you stand financially.
- You can explain your situation, but make it clear that you will have to resort to bankruptcy if an agreement cannot be reached. Let them know that you are still willing to pay as much as you are able, but if you do not make changes to your current situation, bankruptcy will be unavoidable and they would risk a complete loss. Most creditors are willing to work with you, especially if it is the only conceivable way of recovering any of the money owed to them.
- Account Details. Include your account number and how much you owe, as well as any reference numbers, names, or dates of previous telephone conversations with the creditor.
- Proposal. Look at your finances and decide what you can afford to pay toward your debt. Explain the terms of your proposal clearly so creditors know exactly what you are offering – how much you can pay and how long it will take you to meet the agreement. Also, make sure that you request that your account be reported as “paid in full” , that any lawsuits or collections be terminated, and all negative or black marks be removed from your credit report. One of the primary purposes of a debt settlement is preserving your credit score as much as possible.
- Often, your initial proposal will not be accepted, but creditors will frequently respond with a counter proposal. Keeping this in mind, you may want to ask for better terms than you are expecting to get, so that final negotiations will be close to what you are actually hoping to receive. Remember, never offer or agree to something that you cannot deliver. This may buy you a few extra months, but could get you into more trouble in the long run.
- Professional Tone. When writing a debt settlement letter make sure your tone is both professional and polite. Avoid making demands or sounding threatening. The creditor does not have to agree to your proposal.
- Request a Letter of Agreement. Once both parties have come to an agreement, request that the creditor send you a Letter of Agreement to confirm the terms. You may also wish to include a copy of a debt settlement agreement for the creditor to sign. Do not pay anything until you receive this confirmation so that you have legal protection if further action is taken.
Helpful Tips for Writing A Debt Settlement Letter
- Know your rights. When it comes to debt settlement, it is important that you know your legal rights before you send a letter. These letters are considered legal documents, and anything you say can be held against you if legal action is taken.
- Creditors can choose what they report to credit bureaus and you have the right to request that certain information be removed, or not reported, so that your credit rating is protected.
- Also, you do not have to settle with a collection agency, but can communicate with the creditor directly. Collection agencies may pressure you because they get a percentage of the money; however, you do not have to settle with them.
- Keep the letter as short as possible. This is a business letter, not a journal entry. Make an introduction, state the proposal, and sign the letter. Be clear, concise, and to the point.
- You need to be firm, clear, and concise, but remember to keep your letter a ‘request’ rather than an ultimatum. Also, it is not your creditor’s fault that you are in a difficult financial situation, so try not to sound angry or frustrated. Maintaining professionalism will get you the best results.
- Follow up with credit bureaus. If you agreement included actions to preserve your credit rating, you should follow up with the major credit agencies after you have settled the debt. You want to make sure that the creditor has honored their part of the agreement.
- Keep all documentation. Keep a copy of your debt settlement letter, any counter-offer letters, signed agreements, canceled checks, or receipts as proof of payment to show credit bureaus if needed and to protect yourself in case further legal action is taken in the future.
Debt settlement legal letters are an effective way to negotiate with creditors and help you reach an agreement that will benefit both parties. You may decide you would prefer to hire proper representation to do it for you.
Check out any debt settlement companies you may want to work with. Most attorney general’s Web sites will have information on problem companies.
Free Sample Settlement of Debt Letter (s) and Agreement
However, if you wish to do it yourself, you may benefit by following the sample settlement debt letter (s) and sample agreement below. They will remind you of the more important points.
Free sample settlement of debt letter with payment plan in PDF format or in rich text and open document format for editing.
Free sample settlement of debt letter with lump sum payment in PDF format or in rich text and open document format for editing.
Free sample debt settlement agreement in PDF format or in an editable rich text and open document format.
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