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In such circumstances, debt settlement is considered to be the best way out. Also known as debt negotiation or debt arbitration, debt settlement is a mutual deal between the debtor and creditor, wherein both the parties come to a mutual agreement according to which the creditor either reduces the rate of interest on the outstanding debt, extends the time period of debt repayment or settles for a part of the payment instead of payment in full. Irrespective of which of these options of debt relief you are seeking, you have to initiate debt settlement process with the creditor, and when it comes to initiation of debt settlement, one of the most useful tool is the debt settlement letter. Before we move on to the sample debt settlement letter and its details, let's try to understand what this letter is and how it works. What is a Debt Settlement Letter? A debt settlement letter, also known as a debt arbitration letter or a debt negotiation letter, is a formal letter written by the debtor to his creditor in a bid to initiate the process of debt settlement. Through this letter, the debtor conveys his current financial position owing to which he is not able to repay the debt and tries to strike a mutual deal wherein the entire debt amount or a part of the debt amount is exempted. hile getting an exemption is the first priority, the debtor can also seek for lowering of the interest rates or extending of the repayment period through the negotiation letter. The creditor is bound to be more than happy to get a part of the payment or get it a bit late, rather than losing the entire amount, and this very fact makes debt settlement program one of the most popular tool in the financial circuit. Writing Debt Settlement Letter Before you commence debt settlement letter writing, you need to evaluate your financial condition. It is highly unlikely that the creditor will exempt the entire amount and go into a loss, and thus it is better off to be ready for the next best option, i.e. payment of a part of the outstanding debt. hile the creditor will !uote an amount which is ideal according to him, you need to review your financial condition and come up with an amount that you can pay off by selling your assets and investments. "ou need to understand that a settlement letter is not an final agreement, but a part of debt settlement negotiation. That being said, the creditor can even refuse your offer and you might have to indulge in a face to face debt settlement negotiation process for any positive results. Sample Debt Settlement Letter to Creditor If you feel that writing such a negotiation letter is a daunting task, going through the debt settlement letter example given below will make the task easier for you to understand.
That being said. Thanking "ou. 3signature4 'alf Adams 3%ame of the 5ompany4 . as outlined in the documents attached with this letter. I would be grateful to you if you consider my situation. I re!uest you to take my financial condition into consideration and accept my offer of paying 2(& xxx as full and final settlement of my outstanding debt in cash. with your bank. am holding a credit card account numbered xxxxxx+. 1oing by my current financial condition.-. I 'alf Adams.The #perations $anager %ame of the Bank Address of the Bank &ate 'espected (ir)$adam. I have been availing the credit card facility provided by your bank over the period of last /0 months. I have not been able to pay the due amount on time as a result of some financial problems that I am facing. $ore recently though. a resident of *hiladelphia *A. accept this part payment and relieve me of the outstanding debt. it is not possible for me to repay the due amount.