Writing a Debt Settlement Letter from Debtor [with Sample]

To get out of paying a debt in full, many collection agencies will accept a percentage to settle the debt. If the account has been in collections for a while or they deem the account hard to collect, they will be happy to get something rather than nothing.

A collection company may send a customer a letter offering them a debt settlement, or the customer may need to initiate a reduced settlement offer. 

This should always be done in writing in a debt settlement letter, as it seems to be the best way to communicate with a debt collector. 

Why Writing A Letter Some Might Ask?

Calling on the phone can get some of the work done, but a person always runs the risk of getting someone who is clueless on how to do this transaction, or it must be reviewed by a supervisor. 

If it is worth sitting on the phone for extended periods then call, otherwise write a letter. This type of letter should be formal and should be packed with information the company needs. If it is at a third party collection agency, they will need to know the original debtor, amount and date debt was occurred. 

They may have the account listed under a phone number or address. It is hard to say how they manage accounts, as they all are different. By providing plenty of information, they should be able to find the account.

Block Letter Format

Try to stick with a block letter format. This is where the writer’s name and address are first in the top hand corner, followed by the date and then the recipient’s information. It is acceptable to put an attention line or to put a subject line. 

Since these companies have numerous departments and representatives, it is best to address it to the attention of a specific person. The first paragraph in the letter needs to house the most information. 

This is the paragraph that most people will pay the most attention too. It is easy to lose a reader after the first few sentences, which is why the important stuff needs to be first. 

Don’t Allow Them To Intimidate

One thing to remember when writing this type of letter is that they deal with this all the time. These companies just want to collect something. Don’t allow them to intimidate, threaten or even harass. If they have a phone number, they will call day and night trying to find a resolution. 

Remember, they are just as eager to settle this account as the debtor is, sometimes more. Keep the tone of the letter friendly and eager to work things out. 

Collection agencies usually move quickly on requests of this type, as most of their clientele won’t hang on to extra money they have. Here is a good sample of a debt settlement letter. 

Sample Debt Settlement Letter From Debtor

Carrie Bond
7834 Old Church Way
Reynoldsburg, Ohio 43068

February 5, 2020

ABC Global Collections
7700 Brice Rd. 
Reynoldsburg, Ohio 43068

Re: Account # 2B45T90C12J

Dear Sir or Madam,

My account for Capitol One Auto Finance has been placed with your company for collection. I have not had the means to be able to pay this debt and have avoided contact with your company. 

However, this year I received a tax refund and would like to try to settle this debt. The original account number associated with this account from Capitol One was 2389045768. The balance on the account at the time of collection was $2,789. 

After you have added all your late fees and interest, the balance at last statement was over $5,000. I would like to propose a settlement offer to clear this debt.

Since the original amount owed was $2,789 I want to start working from that number. The nearly $2,500 in interest and late fees is observed. I offer a settlement on this account of half, which would be $1,400. 

This should cover the account and late fees and close this account. I would also like this reported to my credit bureau as paid in full. 

If accepted, I would be willing to pay this account today by credit card over the phone, or to do an overnight payment to your company. Please contact me as soon as possible at, 614-890-7843. I look forward to speaking to a representative. 


Carrie Bond

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