Negotiating and settling an outstanding debt can be a minefield and it may be worth taking advice from an organisation such as Citizen’s Advice Bureau if you live in the UK or something similar in your own country.
Once you have decided to contact the creditor (the company you owe money to), then take the following steps before sending the sample debt settlement negotiation letter below:
- Check the actual outstanding amount. It will probably be different from what you might be expecting as fees and interest will almost certainly have been added.
- Check that the letter you have received regarding your outstanding payments is legitimate and not a scam.
- Make sure you can afford the amount you are proposing to pay to the creditor. Be realistic especially if you have other debts to repay too.
- Read the details on the letter carefully so you know exactly who to contact when you write your settlement negotiation letter.
There are two sample letters to choose from. One is when you can afford to pay off a sum to clear your debt entirely, the other is to offer a payment plan.
Debt Settlement Negotiation Letter – Sample 1 – offer to pay debt in one lump sum.
[Debtor name – you]
[Address]
[Contact Name]
[Department]
[Company name]
[Address]
Date
[Credit Agreement Number – 12345678]
Dear [name]
I have been informed that an outstanding debt of mine that was previously held with [credit company] has been passed to your company for collection. I have also been informed that the outstanding balance on the debt is [amount] but I understand that there may have been additional charges added to this balance since it has been passed to your company.
I have taken advice with regards to my debts and have been advised to write to all of my creditors with the intention of negotiating a final debt settlement figure. My financial advisor has placed all of my debts in order of priority and I am at the moment negotiating final settlement discounts on these debts. If there is a way we can negotiate a discounted debt settlement figure then I will be able to make an outright payment on this account.
At present the creditors I have contacted are willing to settle at a 50% discount on the outstanding debts. If you would like to contact me with regards to negotiating an amount then this debt can be settled as soon as an agreement has been reached.
I look forward to hearing from you, and your understanding in this matter is appreciated.
Yours sincerely
[Your Name]
Debt Settlement Negotiation Letter – Sample 1 – offer to pay debt in regular payments.
[Debtor name – you]
[Address]
[Contact Name]
[Department]
[Company name]
[Address]
Date
[Credit Agreement Number – 12345678]
Dear [name]
I have been informed that an outstanding debt of mine that was previously held with [credit company] has been passed to your company for collection. I have also been informed that the outstanding balance on the debt is [amount] but I understand that there may have been additional charges added to this balance since it has been passed to your company.
I have taken advice with regards to my debts and have been advised to write to all of my creditors with the intention of negotiating a payment plan to repay the debt. My financial advisor has placed all of my debts in order of priority and I am at the moment negotiating payment plans on these debts. The amount I can afford to pay on a [monthly/weekly] basis towards this debt is [name amount].
If you would like to contact me with regards to negotiating a payment plan, then this can be set up as soon as an agreement has been reached.
I look forward to hearing from you, and your understanding in this matter is appreciated.
Yours sincerely
[Your name]
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