Writing an Insolvency Letter to Creditors? So, use this sample insolvency letter to creditors as a template for your successful insolvency letter to creditors.

Unfortunately, many people die while they’re still in debt. However, death doesn’t automatically eradicate all financial obligations just because someone dies. Creditors often approach those individuals who are associated with the estate of the deceased in order to collect payment.

Depending on their specific relationship with the dearly departed and whether the debts in question are joint debts, those individuals may not be liable to pay off the balances.

If a creditor attempts to collect money from an estate that’s simply unable to cover the entire debt, it may be necessary to write an insolvency letter to the creditor to let them be aware of the situation.  

What Is Insolvency?

From a practical standpoint, insolvency is the circumstances where a person can’t raise enough money in order to meet its financial obligations, or honor the debts for payment as they become due.

Technically referred to as insolvency, it could happen if the value of a person’s total liabilities surpasses its total assets. Insolvency alone doesn’t give enough leverage for lenders to legally petition with regards to involuntary bankruptcy concerning the borrower, or try to force a liquidation of their assets. 

Determining insolvency is key in order to deduct debt cancellation from the overall gross income. Keep in mind that if a debt is cancelled and it doesn’t have any positive impact on insolvency, then the debt that’s canceled will qualify as an actual deduction concerning gross income..

Sometimes, this is considered the lender’s legitimate way of ‘passing the buck’ over to you in order to defend themselves. 

Sample Insolvency Letter to Creditors

Jane Smith
289 Forest Drive
Manilus, AR 98383

ABC Collection Agency
9877 North Avenue
Nelson, TX 78327

August 3, 2019

RE: Acct # 5656-9878-9668

To Whom It May Concern, 

I am writing this letter in response to a certain notice I received from your organization on July 18, 20xx. This is not an actual refusal to pay. However, a notice to the Fair Debt Collection Practices Act, 15 USC 1692g Sec. 809 (b) disputing your claim and requesting validation has been sent. 

This is a formal request for validation regarding the previously mentioned title and section, rather than proof of my actual mailing address or request for verification. I am respectfully requesting that your organization give me clear evidence that I am personally and legally responsible to pay you. 

I am requesting the following:

• What the exact amount of money you claim I owe is actually for
• Explain in detail how you calculated the amount what you claim I owe
• Give me copies of any official papers that prove I agreed to pay you what you claim I owe
• Reveal the original creditor
• Provide a copy or verification of any judgment if it applies
• Prove to me that the Statute of Limitations hasn’t expired regarding the account
• Prove to me that you’re a Registered Agent and show me your license numbers
• Prove to me that you’re legally licensed to collect debt in my state

Also, if your organization has reported any invalidated information regarding this matter to the three credit bureaus, including TransUnion, Experian, or Equifax, it could be considered fraud according to Federal and/or State laws.

Therefore, if I discover any negative marks on my credit report from your organization, I won’t hesitate to pursue legal action against you since you will be in violation of the following: 

• Defamation of Character
• Fair Debt Collection Practices Act 
• Fair Credit Reporting Act

The sooner your organization can provide the requested documentation, the sooner this matter can be resolved. I will need a minimum of 30 days in order to fully investigate this matter. During this period, any collection activity has to cease and desist immediately. 

Also, if you take any action while I am validating your claims that could possibly be considered harmful to my credit report, I won’t hesitate to contact my attorney. This may include any information sent to a credit reporting repository that’s considered invalidated or inaccurate. 

If your organization fails to respond to my request within 30 days of the date shown, all references concerning this account have to be deleted and removed 100 percent from my credit files. I am requesting that a copy be sent to me immediately after such deletion. 

Also, I am formally requesting in writing that your organization cannot contact me at my place of residence or my job. If you do attempt to contact me, whether it’s through a third party correspondence or computer generated calls, it’s considered harassment and I will immediately file a suit against you. Any communications in the future with me personally must be in writing and submitted to the address listed above. 

This is my personal attempt to point out to you that your records are incorrect. Any information I receive will be used to achieve that specific purpose. 

Best Regards, 

(sign your name here)
Jane Smith

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