Debt Settlement Letter Sample: How To Settle Your Debts Yourself

When it comes to the tactics used for debt elimination, debt settlement is an option that can help you avoid the time and expense of bankruptcy. Debt settlement involves direct negotiations with your creditors where you essentially offer to pay a lump sum amount, lesser than the total balance due, but which will satisfy your debt as paid in full.

Debt settlement companies can often be fly-by-night organizations set up to scam you out of money or they might be perfectly reputable business that can help negotiate your debts but will charge you inflated fees to do so. Debt settlement may be a bit of a process requiring follow up and patience but it certainly can be done on your own, without costly third-party intervention.

Part of process of negotiating and settling your debts, involves written correspondence with your creditors. It can be difficult to know what to say or to ensure you have included all relevant information so we have crafted a sample letter, which can serve as your guide for crafting you own letter to your creditors. Be sure you don’t just copy and fill in the blanks without first reading it and editing it to make it is relevant to your debts with creditors.


[CREDITOR NAME] and [YOUR NAME]  agree to settle the current debt between them using the following terms and conditions:
[CREDITOR  NAME] and [YOUR NAME] hereby agree that alleged debt of $ [add balance here].  The above parties agree that [CREDITOR NAME] shall accept the sum of $_________ as payment in full on the  current debt. The payment shall be made in the form of a cashier’s check or money order. The acceptance of the payment by [CREDITOR NAME] will serve as a full discharge of all monies due, and [[CREDITOR NAME] does agree report the debt as paid in full. Furthermore, [CREDITOR NAME]agrees to take no further action to collect on the alleged debt.

This contract is based upon  payment being received by [DATE]. If [YOUR NAME] fails to pay the agreed-upon amount by said date, this contract will be terminated immediately and the original amount owed by [YOUR NAME] will stand to be immediately due.
Upon collecting the $_______.00, [CREDITOR NAME] will eliminate any  information that they may have placed on [YOUR NAME]’s credit report. [CREDITOR NAME] agrees to never at any time in the future place any information on the [YOUR NAME]‘S credit report.

This contract shall be binding upon and inure to the benefit of the parties, their successors, and assignees.


Signature: ______________________________________________________

Legal Representitive of [CREDITOR NAME]

Signature: _______________________________________________________
Account Holder

**Be sure to send two (2) copies by Certified Mail/Return Receipt Requested so you know and be able to prove the creditor has received it. Be sure to follow up until you receive a signed original back in the mail from the creditor. **


  1. diane diaz says:

    a very nice tip and guideline on how to write a formal letter.Thanks for sharing it with us.I’m pretty sure a lot of people will find this sample of yours very helpful/

  2. Diane Diaz says:

    This is a very nice sample,tips and guidelines on how to write a <a href=””>cover letter </a>.Thanks for sharing it with us.I’m pretty sure a lot of people out there will find this blog of yours very helpful.

  3. Very helpful write-up and sample letter. I was able to successfully receive a 20% deduction and debt settlement by following similar processes myself (without the help of a company or lawyer). The bank issued the settlement letter to me. I found this site searching for a Paid In Full letter, after payment has been made.

    Do you have any recommendations or samples of a form I could have the bank representative sign releasing all liability?

  4. Great News Ed, glad you were successful. We will work on a letter that will help ensure 0 liability.

  5. wow!!!!!!! very important and informative blog. It is good to see some tips and guidelines on how to write a letter. Thanks for sharing it; hopefully it will help many people. Thank you once again for sharing these topics. Keep sharing…..

  6. It is good to see some real information in your blog. You well said and I agree with you. To consider bankruptcy consult with an experienced attorney to ensure that you are pursuing the right option for your overall financial well being. Thanks for sharing it .
    I just wanted to throw you a big thank you – you cleared up some things for me! . Keep sharing…………

  7. I just go through your blog and i am really agree with you. Thank you for this important information. It is too good to see some tips and guideline on how to right a letter. Thanks for sharing it. Keep sharing.

  8. It’s going to be ending of mine day, however bbefore ending I
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