How to Write Settlement Letters to Creditors

Debt settlement can help people lower the amount of debt they owe by renegotiating the terms of the debt or the total debt due. Many creditors will agree to debt settlement offers, because they see them as a chance to recoup at least some of their money. Although people can hire professional debt settlement companies to deal with creditors a simple debt settlement letter will often work just as well, if not better. Your debt settlement letter must be professional, clear and short.

Instructions

1

List your monthly expenses and income to determine how much money you have each month to pay off the debt. If you have cash-on-hand, determine how much of it you can use for a lump-sum payment. Write down the monthly and lump-sum amounts for future reference.

2

Write your name, address and account number on the top-right side of a blank sheet of paper. Write the creditor's name and address on the left side.

3

Begin the letter with the current debt balance and tell the creditor that you cannot afford to pay the total amount in full. Give the reasons why you cannot pay the debt but do not try to invoke sympathy. If you are on the verge of bankruptcy, make note of it, because creditors may not get any money if you file bankruptcy and may be more willing to work with you.

4

State that you are willing to make monthly payments or, if you have the cash, a lump-sum payment and give the figures.

5

Request that the creditor send you an agreement in writing in the third paragraph. This will ensure the creditor does not take your money but fail to hold up its end of the bargain.

6

Close the letter by thanking the creditor for considering your settlement. Sign the letter.