Debt Letter Templates

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Updated October 05, 2021

Debt letters are used by creditors and debtors to collect, verify, dispute, and settle debts in accordance with the Fair Debt Collection Practices Act. It is highly recommended that any communication that takes place between a creditor and debtor be done via certified mail in order to have a receipt for such statements.

Certified Mail – Not required, although highly recommended, that all debt related letters are sent Certified Mail with return receipt.

Laws – § 1692 to § 1692p (Debt Collection Practices)


Credit Report Dispute Letter – Use to try to remove an amount owed from your credit report.

Debt Collection Letter – Use when attempting to collect a debt.

Debt Forgiveness Letter – Write a letter stating you are exonerating an individual or company of their debt to you. Typical for outstanding debts that the creditor would rather “write-off” as a loss (on their taxes) rather than pursue collection.

Debt Release Letter – After a debt has been paid this acts as a receipt.

Debt Settlement Agreement – If two (2) parties come to an agreement over the resolution of a debt.

Debt Settlement Offer Letter – Use when making an offer to compromise on a debt owed. This is usually to create a new payment plan.

Debt Validation Letter – If an individual is served with a collection notice he or she has the right to verify the debt exists by sending a letter requesting any and all evidence describing the debt owed.

Pay for Delete Letter – Offers a company or collections agency money if they are to accept a settlement and release the debt along with asking the reporting agencies to remove.

How to Send a Debt Letter

Step 1 – Describe the Parties

The parties of who the letter is coming from and who it is addressed to should be in the upper-left of the letter. Also, entering the effective date is also helpful if this is an offer as if it’s only valid for a certain number of days it will become useful.

Step 2 – Know Your Rights

The rights of the consumer and any creditor are spelled out in the Fair Debt Collection Practices Act ( § 1692 to § 1692p) which requires debtors to state specific items when administering a debt such as the amount ($), original creditor, and that the debtor has thirty (30) days to dispute any collection.

Step 3 – Offer a Settlement

Unless the creditor feels as though the debtor is credit-worthy, most debts get discounted by up to 70% if the debtor is offering a lump-sum payment. This final payment is usually difficult for any business or collections agency to give up on as so many debts go uncollected. And if the creditor figures the debtor does not care what is listed on their credit report it becomes even harder to obtain payment from an individual.

Therefore, asking for something a little less than the original amount always has a better response.

Step 4 – Respond / Accept the Terms

Responding to the letter is the best choice no what it says. Whether the letter is an offer, then reply with a counter-offer, or of the letter was a claim it is best to request its validation. also, if there is any other contact on the letter it is much better to communicate through phone or e-mail. The traditional mail (“snail-mail”) takes far too long especially since most companies have limited support through their inbound mailing process.

Related Forms

Cease and Desist Letter for Debt Collectors – Prohibits a debt collector from further calling an individual who owes money. Once the letter has been sent the only communication that can be done is through the mail.

I Owe You (IOU) – Simple letter describing money owed to a party and when it should be paid back.

Loan Agreements – The most extensive type of document in order to borrow money. Allows for late charges, security, default language, and any other terms to be set by the parties.

Promissory Note – States when a loan should be paid-back with the only condition being whether the note is secured by collateral or not.