Preparing a Debt Settlement Letter

Writing a good debt settlement letter is a critical part of the debt settlement process. When you write a debt settlement letter, there are several things that you will want to include so that you and the creditor can come to an agreement. Here are the basics of how to prepare a debt settlement letter. 

Be Direct

While you need to be courteous and not have a threatening tone, you need to be direct. Let them know the purpose of the letter and tell them exactly what you are thinking. Do not try to sugarcoat anything and do not pad the letter with generalities. Let them know that you want to work with them if they are willing to work with you. If you have been considering bankruptcy, let them know this. Do not do use this as a threat, but let them know that it is a possibility. Therefore, they will understand how bad of a situation that you are in and possibly be more patient with you. 

Credit Considerations

As part of the settlement process, sometimes a person's credit can be very negatively affected. The creditors will report the settlement to the credit bureaus and it will stay on your record. While writing your letter, ask them to consider removing any negative statements from your credit report. They are under no obligation to report everything to the credit bureaus. Therefore, in return for your willingness to resolve the matter, ask them if they can help you out by not ruining your credit. 

Make an Offer

At this point, you should make an offer to the creditor. Before you write the letter, sit down and look at your financial status. Determine exactly how much you can afford to pay them. You want to pay as much of the debt as possible, however, you can not cut yourself too short either. 

When you make an offer, you should actually break it down into two separate offers. Give them a lump sum cash offer and a payment offer. Tell them how much you could afford to pay per month, if they would prefer that route. For a lump sum offer, creditors will often take much less than what is owed. Therefore, you should not feel embarrassed regardless of what amount you offer in the letter. Just make an offer and it is up to them whether it is sufficient. 

Ask For Proof

In the letter, you should also request a letter of settlement from them if they agree to the terms. If they think that the offer is good enough, they need to send you a signed letter that states this. You want something to protect yourself from a potentially negative future situation. For example, the company could take your money, then sell off the remaining debt to a collection agency. Then you start getting calls from a collector months after you thought the debt was settled. Just make sure that you get some kind of proof of agreement before you actually send them any money. 

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