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Howard Dvorkin is Debt.com’s chairman. He’s a CPA, author of two personal finance books, and founder of half a dozen companies designed to help Americans get out of debt.
September 9, 2024 June 18, 2019
When you’re working to settle a debt on your own, you want to do everything in writing. This is especially true if you’re making formal debt settlement agreements. Creditors and collectors will try to get you to agree to things over the phone. Don’t fall for it! Ask them to send you their proposal in writing. Avoid saying anything that acknowledges that you’re obligated to repay the debt. You can use these debt settlement letter templates to negotiate everything in writing.
The first step in any debt settlement negotiation with a collection agency is to validate that you owe the debt. When a debt settlement company calls you, ask the representative to send you a letter validating that the debt is yours and that they have a legal right to collect. They have five days to do so under the Fair Debt Collection Practices Act (FDCPA).
Never admit that you owe the debt or that you’re supposed to pay it. This can reset the statute of limitations on collecting the debt in some states!
The Consumer Financial Protection Bureau provides a detailed free letter template asking a collector for information about the debt. If you receive the letter and believe that you do not owe the debt, then you have 30 days from the date you receive the notification letter to dispute that you owe the debt. The CFPB has a letter for that, too.
Templates are downloadable Word Doc files.
Use this template letter to make an initial debt settlement offer if the debt is still with the original creditor. It includes a negotiating point requesting to remove any late payments or charge-off statuses from your credit report.
This template letter makes an initial debt settlement offer to a third-party debt collector. Use this template if your debt was sold by the original creditor to a collection agency or debt buyer. The offer includes a request to pay for delete.
This template letter makes a counteroffer when an original creditor offers you an initial settlement amount. The goal is to offer a lower amount and negotiate for the removal of the negative information from your credit history.
Use this template letter to make a counteroffer to a collector. Your goal should be to negotiate a lower amount than what the collector offered initially. It also negotiates for pay for delete, where the creditor agrees to delete the collection account in exchange for your payment.
