If you are under the heavy burden of debt and want to get some respite from it, then you can write a Debt Settlement Proposal Letter for the same.
But this letter could make or break your financial freedom, so to write the perfect Debt Settlement Proposal Letter read our article till the end.
- Your debt settlement proposal letter should start with the reason as to why you are unable to repay your debt.
- You should also propose the amount that you can pay.
- You can also add your expectations from your creditor.
What is Debt Settlement Proposal Letter?
Debt affects everyone at this age, and it’s not easy to get rid of it once it comes to the level where you can’t pay it.
However, there are ways to settle those debts, and one of them is debt settlement.
Debt settlement is a negotiation that you make with the creditor, or a debt settlement company does it for you.
This option comes into light when the borrower can’t pay the entire debt and needs a way out with better terms.
The terms of the agreement entirely depend on the situation, how much you owe, and the terms that both sides are willing to take.
This article will show to write a good debt settlement proposal letter to start the negotiations between you and your creditor.
Your financial situation
So your letter must start with the reason as to why you are unable to make payments towards your debts.
This could range from a massive life incident like a health issue or a job loss, or small things that led you not to be able to pay any outstanding debt.
You might also talk about other financial obligations you have to anyone or any company. You should also be able to prove that.
Read: What Is Debt Management?
The Offer For Debt Settlement
Then you move on to talking about the offer you would be willing to take and pay later on.
There are many things to consider, but you have to make sure that you propose a number you can actually pay.
You can reduce the total number you owe if you can pay the entire debt in full if there is a deduction [Also you can get help from debt settlement companies].
Or you can suggest paying it in monthly payments (or lower monthly payments if it is already a recurring payment).
Your Personal Information
Later, once you finish with the details of the settlement negotiation, you must include your contact so that the creditors can identify who you are and know your debt fully.
You can include your full name and account numbers to make things easier for both sides.
Your Expectations From The Other Side
You could also add what you expect from your creditor as part of you paying your debt with reductions or some fix to it for recurring payments.
If there is nothing, you should definitely request a written confirmation of your creditor’s acceptance of the proposal you made.
The bottom line is that debt settlement should not be a hard and lengthy process.
All you need to do is to find common ground with your creditor and make sure that you can make those payments after making the debt settlement.
It might not be as you would like, but you will most definitely lower the amount you owe and at least make payments in a systematic way without missing any payments.
This helps both sides as the headaches of payments will be gone after the settlement.
Amit Gupta is the founder of National Planning Cycles, a company that helps startups, individuals, and small businesses with their financial planning. He has a vast amount of experience in the finance sector, having managed Google Play accounts for some of the world’s most successful unicorns. Amit is an expert in his field, and he uses his knowledge to help others achieve their individual goals.