Knowing how to write an simple yet effective debt settlement letter is very important because it is the first step you need to take to renegotiate yourself out of debt. Debt settlement, also known as debt negotiation, is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full.
A debt settlement letter (often called “debt settlement agreement“) is a binding contract between you and the creditor and if done correctly, can help get out of debt faster and in the process, improve your credit score. There are a number of things that should always be included in one of these letters to make sure you aren’t setting yourself up for trouble.
Here’s an overview of what you need to include along with a sample letter.
- Always make sure your name, address and zip code are located on the letter, along with today’s date.
- The collector’s name and address should follow, along with your account number.
- Address the letter to someone helpful you spoke with by phone if possible.
- Explain your debt situation and what you plan to do.
- List the amount of debts you have and what you can do to improve your chances of repayment, such as a new job.
- Be sure to include a proposed settlement amount, along with your terms. When you receive a letter back agreeing to your terms, include a payment.
- Sign the letter and date it.
Courtesy of: Ezine
Sample of Debt Settlement Letter
Your name
Address
City, State and Zip
Today’s date
Creditor Name
Address
City, State and Zip
Re: Your Name
Creditor’s Account Number
Your Social Security Number
I (name) wish to settle the outstanding debt with (creditor). (Explain why you’ve fallen into debt.) I strongly wish to pay back this debt.
Currently, the outstanding debt balance is (dollar amount). I am willing and able to settle this amount for (amount you can afford to pay). As part of this settlement I am making the following requests:
My account will be shown paid in full.
Any ligitation is dropped.
All negative listings will be deleted from the three credit bureaus below.
Equifax
Experian
TransUnion
Upon acceptance of this letter (creditor name) agrees to the terms and settlement conditions and I (name) will send an overnight money order in the amount of (settlement amount) paid to (creditor name).
(Creditor name) agrees to forward this letter to the three credit bureaus listed so negative listings may be deleted.
(Print Your Name) (Print Date)
(Sign your name)
The above is just a common example of debt settlement letter for your perusal. You are free to edit to suit your current financial situation.
If you need professional debt settlement advice, you should consult with an independent debt counselor or hire a lawyer to act for you. Nonetheless, it is advisable going with a trusted and reputable one before making any decision, this way you will save time through specialized advise coming from a seasoned debt advisor. You can research and compare some of the debt settlement services online and determine the one that meets your specific financial situation.