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Sample Letters

Letter for Debt Settlement Agreement

A debt settlement agreement letter is typically used to confirm in writing what verbal agreement you had with your creditor or collection agency to settle your debt. However, make sure you send two copies of the letter via certified mail so that you can have proof that they have received it. Moreover, request one signed copy of the agreement.

(Creditor’s/Collection Agency's name) and (debtor's name) hereby agree to compromise the debt amount under the terms and conditions that follow:

(Creditor’s/ Collection Agency's name) and (debtor's name), both the parties agree that the outstanding debt is $____________. Moreover, the parties consent that (Creditor's/Collection Agency's name) will accept a sum of $____________ and consider it as full payment. The acceptance of the payment will be treated as a complete discharge of all due bills and (Creditor’s/ Collection Agency's name) will not take any further step to collect on the alleged debt. The payment will be made once the agreement is complete and either in cashier’s check or money order.

This agreement will be valid until (Date) and be treated as null and void if the debtor fails to make the payment within the due date and the account status will immediately stand as due.

Upon successful payment of the compromised amount, (Creditor’s/ Collection Agency's name) agrees to erase any negative information that it might have placed on the debtor’s credit report. Moreover, (Creditor’s/ Collection Agency's name) agrees to never place any such information on the debtor’s credit report in future.

Both parties are obliged to abide by the rules and regulations of the agreement and it’ll stand to benefit the parties, their successors and assignees.

Dated: (Today’s date)

Signature: _________________

Legal representative of (Creditor's/Collection Agency's name)

Signature: ____________

[Account holder’s name]

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  • The debt settlement program typically lasts between 6 months to 4 years time.
  • At least 30% of the debt amount per creditor needs to be accumulated in the trust account for OVLG to give the creditor any settlement offer.
  • Not all creditors or debt collectors will accept a reduction in the balance, interest rate, or fees a customer owes such creditor or debt collector.
  • Pending completion of the represented debt-relief services, the customer's creditors or debt collectors may pursue collection efforts, including initiation of lawsuits.
  • That the use of the debt-relief service will likely adversely affect the consumer's creditworthiness, may result in consumers being sued by their creditors, and may increase the amount owed to creditors as a result of the accrual of additional fees and interest.
  • Savings a customer realizes from use of a debt-relief service may be taxable income.