Debt Settlement Offer Letter

Debt Settlement Letter

Debt Settlement Offer Letter

A debt settlement offer letter is a letter you or your attorney sends to a creditor or debt collector or the creditor sends you an offer letter.  Debt settlement letters are sent when a debt is significantly past due and possibly in collections, and the debtor (you) cannot afford to pay the debt. Letters might also be used when a debtor can afford monthly payments, but knows these payments will drag on endlessly and it would be financially beneficial to settle the debt for less than the total amount owed. It’s also possible for the debtor to receive a letter from the lender or debt collector with an offer.

An offer from a creditor should include the following:

  • Reference the account by account number and name.
  • List the alleged current balance.
  • List the amount offered to settle the account in full and how it is to be paid.
  • List the deadline of the payment due date.
  • Explain clearly that by paying the settlement before the deadline, the full debt will be settled and released.

Should You Make an Offer?

Let’s start with whether or not you should reach out with a settlement offer to the lender or debt collector.

First, it’s important to understand the benefits of settling a debt. And just as important is to realize that settlements, while seemingly beneficial to the debtor getting to pay less than what is owed in total, are also beneficial to the creditors or collectors. In most cases, debt collectors want to settle just as much as you do – in some cases even more.

Knowing this puts you into a position of power – something you might not have felt lately if debt collectors are beating down your door.

The simple fact is settling a debt benefits the collector because it means they’ll get a significant portion of the debt. It’s no secret the odds of getting an account in collections paid aren’t that good. In many cases, the debtor files for bankruptcy and the debt is discharged, which means the debt collector risks getting nothing they are owed.

If the debtor doesn’t file for bankruptcy, the debt collector will need to take legal action to collect on the debt, which costs money and time.

Should You Send a Debt Settlement Offer Letter?

Offering anything without the help of an attorney is usually not advisable.  This is because you may extend the statute of limitations to be sued on your debt.  Also, you may have other debts where it is more likely they will sue you.

If the creditors sends you an offer to settle, run it by an attorney to confirm it’s not a scam and it’s legitimate.

For help with a debt lawsuit or judgment or other general debt questions feel free to call us at 800-220-4318.

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