Debt Settlement Letter

Formats:

Overview

Making a realistic off to settle a debt can often avoid legal action being taken.

• Our debt settlement letter template is drafted by a Debt Recovery Solicitor.
• In the 72% of debt claims are settled without litigation.
• Incentivise your creditor to settle your debt by making an offer of settlement.
• Use our template as many times as required to manage your Creditors.

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Debt Settlement Letter

In the debt recovery process there are four steps you will need to follow before you enter court proceedings to obtain payment. The first step is the Debt Reminder Letter that offers seven days for the debtor to send out payment. It is a gentle but firm reminder that you are owed money. The second step is the Late Payment Chaser Letter that again reminds the debtor of their obligation. This second step is a bit more forceful and direct about what could happen if payment is not made in seven days. After step two you have given the debtor at least fourteen days to make payment. At this time you can send out the Debt Settlement Letter.

The Debt Settlement Letter outlines a settlement between you and the company for getting payment. The letter basically outlines that you are willing to compromise on the payment the debtor owes you in order to solve the issue. The settlement letter is non- specific regarding the terms. Basically, it is an invitation letter to open up negotiations with the debtor.

In the United Kingdom about 72 percent of debt recovery issues are solved outside the courts due to this debt recovery process. The letters, especially this third letter, tend to help the debtor realise their options and to solve the issue. However, the rest of the cases may end up in court. Those that end up in court are debtors who ignore the letters and fail to negotiate terms of the debt.

The Debt Settlement Letter provided on this website can be used for offering a settlement option for the debtor. You can decide on whether the letter still requests the full amount or a partial amount. Like the debtor, you do not wish to enter into court proceedings. It can be a further cost to you and take up more of your time.
 
It is in your interest to deal with the debtor regarding the specific circumstances. Obviously you wish to have the full amount, but if that is not possible accepting what you can get will help keep your business from wasting more time and money on the matter. It is, therefore, to your advantage to use the Debt Settlement Letter template supplied here.

You should be realistic in your offer. The letter can simply be a tool to open up negotiations or explain explicitly what you hope to gain by way of payment. An individual in the debtor position can also use the Debt Settlement Letter. If you are the debtor you can use the letter to accept the offer or make an offer you can afford. It gives the creditor a chance to understand your position and accept an offer.

The template on this site can be customised to fit your needs. You can change the wording of the letter and the offer in it. The template is to get you started in the process and show that you are willing to deal whether you are in the creditor or debtor position.