Debt negotiation letters for out of reach debt payments

Debt negotiation involves a lot of communication with your creditors and an arbitrator, if you have chosen to seek one. Along with phone calls, you might also be writing many letters, and you want to give your messages as clearly as possible. The most common types of letters you will be writing are requesting an alternative payment plan from your creditor, an offer or counter-offer for debt settlement, and acceptance of a verbal offer from your arbitrator. I will give examples of how to write all three.

First, before you make a settlement, you might contact your creditor to change the terms of your current payment plan. This letter should be something you write after you have contacted your creditor on the phone. They don’t always read your letters, so telling them in advance will give more attention to your written word. Your letter is a written request for a “temporary change” in the repayment terms. Explain that you are in a financial crisis and that a reduction in debt would be more beneficial to both parties than filing for bankruptcy. Explain where your income comes from (or where it used to; disclosure of employment loss may make a reduction more possible), and request a lower monthly payment than the current one.

If you would rather get the help of an arbitrator, you will get at least one written offer in print. You might want to make a counter-offer in a letter. First, state that you appreciate that the company is helping you settle your debt issues. Then make your proposal and also request removal of late payments or charge-offs from your credit report (or have it reported as “paid in full”). You can settle your debts only with creditors who are willing to meet your terms. If the arbitrator will agree to your offer, ask for a signature and a returned copy to have a legal document of agreement.

When you and your arbitrator agree upon a settlement, make sure you get the final agreement in print. Here’s how it should look. “Creditor” and “debtor” shall agree to settle the debt under the terms and conditions laid out in the letter. The current outstanding debt is such-and-such, and Creditor agrees to accept less than the full amount, granted Debtor makes the payment by a determined date. The final payment shall be either a lump sum or a monthly payment plan, and if the full amount is not received by the given date, Creditor shall demand the original payment.

With all of these letters, you need to have your name and the account number in the heading, and you also need sufficient space in the closing for proper signatures. If you can follow these guidelines, you may be successful in getting a settlement you can handle.

David Pilley

David Pilley

David Pilley is a May 2010 graduate of the University of North Carolina at Chapel Hill, with a B.A. in communication studies and a creative writing minor. He is a native of Raleigh, North Carolina.

He played clarinet for the Marching Tar Heels in 2005 and 2006. He also volunteered for STV, the student-run television station at UNC-Chapel Hill, in the spring of 2010. He shot video, wrote scripts, and acted for “Off the Cuff,” UNC’s longest running sketch comedy show. He has the rare distinction of having lived in a dorm all four years of his undergraduate college career. He was also on Franklin Street on the night of April 4, 2009. His future plans are to pursue a master’s degree in journalism and to one day work for the media as a sports journalist or broadcaster.

Being one of eight children, David realizes finance is an important topic to everyone, regardless of his/her knowledge of the subject. His interests are in personal finance, budgeting, and savings.

In his spare time, David enjoys watching sports and standup comedy, as well as doing crossword puzzles and writing in the first person. He also thoroughly enjoys trivia and, one day, hopes to participate on the game show Jeopardy!, where he will try to break Ken Jennings’ 74-game win streak.
David Pilley

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