Various Kinds Of Debt Settlement Letters

Debt settlement letters are written offers to creditors to negotiate or validate debts. These letters can offset legal actions by creditors in cases of debtor nonpayment. There is no set language, and the letters vary depending on specific circumstances. Having the assistance of an attorney can help when writing a debt settlement letter.

Negotiation Letters

Often, a debtor can seek to negotiate certain payment terms with the debtors. Samples of negotiation letters include the following:

Counter Offer Letter

A counter offer for debt settlement is a response to a creditor's demand for payment in full. In the letter, the debtor proposes to the creditor what he or she can afford to pay. A template of a counter letter usually includes general information such as the debtor's name, address, phone number as well as the account number. The letter should explain the reasons why full payment cannot be remitted and propose the amount the debtor can afford to pay. Attached to the letter should be a statement of acceptance by the creditor which is to be signed and returned to the debtor if accepted.

Unsolicited Offer Letter

A debtor who has suffered a financial setback can pre-empt the creditor's demand letterby sending an unsolicited letter to settle the outstanding debt. The letter should explain the debtor's financial reasons for the request. The letter can also request a waiver of any late fees and charge-offs on the account.

Request for an Alternative Payment Plan

A request for an alternative payment plan should offer a change in payment terms. If the requested change is for a limited period, the letter should include language that the suggested payment change will be temporary. Again, explain the reasons why the alteration is needed - for example, a sudden change in income or an unexpected financial crisis. The letter should stipulate payment dates and assurances that the debt will be resolved.

Validation Letter

Under the Fair Debt Collection Practices Act,a debtor has the right to request validation of a debt from a creditor or collection agency. Debt validation letters are usually sent where the debtor was not notified of the debt. In the letter, the debtor should request that the collection agency provide proof of the debt. The debtor can request the following:

  • agreement between the original creditor to the credit agency that authorizes the agency to collect from the debtor
  • agreement bearing the debtor's signature wherein the debtor promises to pay the creditor
  • a complete history of payments on the account to calculate the actual amount due

Find a Lawyer

If you have suffered a financial setback and have fallen into debt, you can offset your creditor(s)'s legal action by offering to settle your debt. Depending on the situation, debt settlement letters may offer temporary or permanent relief from particular debts. Consult witha lawyer to help draft a debt settlement letter.

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