Writing a Debt Settlement Request Letter [Free Sample]

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Writing a debt settlement request letter is a good way to negotiate your debt and to agree on a new financial agreement to either pay down or pay off your financial obligations. 

In terms of credit reporting, debt buying, and debt collection, paying off a debt without a documented written statement could prove to be a huge mistake. 

Unless the agreement is in writing regarding the exact amount that both you and the creditor are settling upon, it could come back to haunt you someday.

Payment Plan

When the creditor agrees to your offer, it’s crucial that you keep up with your payment plan. Develop a budget and stick to it at all costs. 

Track every penny that flows in and out of your account. It’s likely that the creditor will ask questions about your current budget.

Creating a debt settlement letter is one of the best ways to negotiate with creditors. If you’re having a hard time meeting all your financial obligations, this may be the best course of action to take. 

No matter if you’re credit card debt is overwhelming you or you can’t make your mortgage payments, your credit score can be seriously harmed by financial delinquency. 

If you’re currently experiencing this, you’re not alone. Thousands of Americans file bankruptcy each year for a number of reasons whether it’s from job loss or serious health issues. 

Most People Need Debt Relief

The statistics reveal that even very financially responsible individuals sometimes face certain problems that are beyond their control and need a big dose of debt relief in order to help relieve their burden. 

Writing a well-written debt settlement letter is a great tool if you’re seeking a plausible solution to protect your credit score or avoid bankruptcy. 

It’s the professional approach to let your creditors know just how much trouble you’re having honoring your financial obligations and that you’re requesting they negotiate a new payment agreement so you can finally pay them off. 

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Debt Settlement Tips

• Know your legal rights. In terms of settling debt, it’s crucial that you know your rights before you write and submit a letter. In fact, your letter is an actual legal document. Therefore, anything you say in your letter can be held against you in the event you have to go to court and face legal action.

• Financial creditors often choose what information they submit to the credit bureaus. As a result, you have the legal right to request that part of that information isn’t reported or actually removed in order to protect your credit score.

• Make your letter short and to the point. It’s a business letter, not a way to vent your frustration over your finances and tell your life story. Be as clear as possible and get straight to the point.

• It’s not absolutely necessary that you settle your debt with a collection agency. You can just as easily talk directly to your creditor. Collection agencies often pressure people since they get a percentage of your settlement.

• After your debt is settled, make sure everything is in good order by following up with the main credit bureaus. It’s very important to determine if your creditor honored their half of the agreement. Check with each credit agency upon settling your debt.

• Keep copies of all your written documents, including a copy of your debt settlement letter as well as any signed agreements, counter-offer-letters, receipts, or canceled checks to show the credit bureaus if necessary and to also protect yourself from potential legal action.

Sample Debt Settlement Request Letter

May 18, 20xx

Account Number: 123456789
ABC Credit Card Company
444 Harrison Lane
West Buford, Texas 67829

RE: Request payoff settlement of my account

To whom it may concern:

I am writing this letter that will serve as a formal offer to pay off my past due balance on my credit card of $680.00 with you, ABC Credit Card Company, account number 123456789.

Due to my financial hardship, I cannot pay the entire balance in full. But, I am able to pay a lesser amount that I think is reasonable given my dire circumstances. 

I want to formally request that if I agree to pay a one lump sum of $400.00, my account will then be paid-in-full and I will no longer receive any more bills or letters to pursue action against me.

If you agree to this one lump sum amount, I’m also asking that you do the following:

  • Immediately close my account so no additional penalty fees or interest is applicable.
  • You send a formal written confirmation of this agreement to my address and keep a copy on file.

Upon agreeing to my proposal and after receiving your confirmation in writing, I will readily pay the amount of $400.00 within 10 days of receiving your written confirmation using a certified check. 

Thank you for considering my proposal and giving it your prompt attention. Please contact me anytime at (164) 877-1234 to discuss this matter further.


Kelly Smith
38 Sunny Lane
Mountain View, Montana 89436

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