Finance Categories
Tips to draft a debt settlement letter
A debtor needs to draft a debt settlement letter efficiently in order to negotiate a settlement with the creditors. Through a debt settlement letter he can requests the credit card companies to reduce the interest rate and penalty charges on the principal balance. And in return he pledges to pay the debt in full. If he is unable to pay the debt in full then the debt stricken consumer can ask to lower the monthly payment.
Until both the parties mutually agree on a payment term there will be counter offers against proposal offered by the other side. After the repayment agreement is set, the creditors determine a time frame within which the payment should be made in full.
Points to incorporate in a debt settlement letter
Here are the following ways that should be incorporated in a debt settlement letter:
- Name and address of the debtor
- Name and address of the creditor
- The name of the company you are contacting
- Include the account number for reference
- The total amount the debtor owes
- Specifying the debtor’s present financial crisis like job loss or wage reduction
- Debtor should mention the proposed repayment schedule along with the amount that he can afford to pay
- Don't forget to include your name, signature and current date
Three types of negotiating debt settlement letters:
Counter Offer Letter:
A counter offer for debt settlement is placed when the creditors demand to pay in full. In this situation, the debtor offers a revised repayment plan to the creditors. Along with the basic information the debtor should also include the reason for his inability to make payment in full and offer an amount that he can afford to pay. He should also include a statement of acceptance in the letter for the creditor that needs to be signed by the creditor and return it if the counter offer is accepted.
Unsolicited Offer Letter:
A debtor undergoing a financial crisis can draft an unsolicited letter to settle the outstanding debt. The letter should give detailed information about the debtor’s present financial situation.
Request for an Alternative Payment Plan:
This is another type of debt settlement letter where the debtor requests the creditor to give an alternative payment plan. Make sure you include the reason for your financial crisis along with the proposed payment date.
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