Debt settlement letter template by

Whether you need to settle a debt for around half, or just get a temporary reduction in monthly payments, the following post will give you what you need.

How to Settle Debt (Table of Contents)

This first video shows you about the mindset required when attempting to settle a debt on your own, provided by Paul J Paquin the CEO at Golden Financial Services.

How to Talk With Creditors (Video)

Are you considering settling a debt on your own but afraid of the possible negative consequences?

You could save around 50% on unsecured debt when settling debt the right way. When debt settlement goes wrong, you could get served with a credit card lawsuit.

But before we get started, did you know there is a credit card debt relief program that could save you up to 55% and includes credit restoration? The plan is called debt validation. If you qualify for debt validation, you could avoid debt settlement altogether.

Before Settling Debt, Use Validation

Before you settle a debt, your first step should always be to use debt validation. Validation could resolve the debt for less money and get it off your credit report entirely if your creditor can’t validate it. Debt validation is the “Big News” right now in the Financial Services World. Here at Golden Financial Services we’ve known about this option and have been offering it for 6+ years now, but the rest of the world is just hearing about it now.

Business Insider recently revealed how:

“$5 billion in student loans may be dismissed because the lender lost the paperwork” (click to read the article)

In many cases, debt collection companies either lose paperwork, maintain inaccurate information on file, or can’t prove they are abiding by federal laws. Debt validation will expose your creditors, forcing them to prove the debt to be valid (at which, then it can be settled), or if invalidated they must release you from paying it and can no longer report the debt on your credit. Debt validation was just rated the “best debt relief program in 2019” (click to read about debt validation).

Debt validation resolves a credit card debt & gets the debt removed from all credit reports when successful.

Best Illinois debt relief, settlement and validation programs for 2019.

You can sign up for a debt validation program right here at Golden Financial Services. Included with debt validation are credit restoration and a money-back guarantee. You can also get a debt validation quote by using this debt calculator. This debt calculator lets you compare debt validation, to debt settlement, consumer credit counseling and minimum payments (giving you a bird’s eye view of all debt relief options).

Try Debt Calculator


Since 2004 Golden Financial Services has maintained an A+BBB Rating and zero unresolved customer complaints – and has hundreds’ of positive reviews all across the internet. In 2019, Golden Financial Services was rated #1 debt relief company by Trusted Company Reviews.

See Golden Financial Services Recent Testimonials

To apply for a debt relief program, just call (866) 376-9846. IAPDA Certified debt counselors are waiting to assist you.


For all of you brave warriors that want to settle debt on your own, use the following guide to minimize the risk of a potential downside occurring: 

here is an example case of a debt that was settled for 40% of the balance

How to negotiate credit card debt on your own

1. Copy the debt settlement letter template that we are providing you. Plug in the blanks with information relevant to your situation. You want to offer 10%-20% in this initial offer, as it’s only a low-ball-offer. The goal is to get your creditor to respond with a settlement offer that is acceptable. If they settle at around 50%, that’s what you want right?

Debt Settlement/Negotiation Letter Template

Debt hardship letter for do it yourself debt settlement

2. Fax and mail a copy of that letter to the collection agency, along with your debt hardship letter, budget, proof of income, receipt of all medical bills and proof of whatever you are saying in the letter. You can acquire the fax number and mailing address off your last collection letter that you received. Certify the mail in order to have tracking and confirmation that your letter was received. You may also call your creditor and ask to speak to a supervisor. Once the supervisor gets on the phone, just get their information so that you can provide them everything in writing by either mail, fax or email. At least you’ll have the name of a supervisor to address in your letter.

3. As suggested in step two, fax a debt hardship letter to each creditor. Write a hardship letter that is approximately 300-400 words long. Include in your letter why it is becoming near impossible to pay your accounts and that you are contemplating bankruptcy. Explain to the creditors that bankruptcy is your only option left if they don’t work with you and this is your final attempt to settle the debt. Dialogue about how you lost your income, your medical condition, job loss or whatever your true hardship is.

Debt Hardship Letter Template (Copy and paste this and then personalize it for your situation)

Your Name

Your Address

Your Phone Number


Debt Collection Company Name


Phone Number

Attention (Supervisor’s Name)




RE: Settling a (state the type of debt it is, like a credit card debt or medical bill). Creditor Name and Account Number


Dear (Supervisor’s Name or Creditor Department Name),


My name is (your name). I am currently going through very difficult times health-wise and financially, which I’m about to explain.


EXPLAIN YOUR HARDSHIP: I was diagnosed with Lime Disease on (date). I incurred $15,000 in medical debt and only half was covered by my insurance. Included with this letter are medical receipts. I stayed at the (include hospital name) on (include dates) and this hospital visit cost (amount) and insurance covered only (amount). This situation has caused me to fall deeper in debt, making it impossible to continue paying on anything besides for my mortgage/rent, groceries, etc… (include a copy of your budget)


I have not been to work in 15 days and my income has gone from (amount) down to (amount).


I have been on a payment plan with your firm paying (amount) since (date). Due to this unexpected circumstance in my life, it’s now impossible to continue paying this amount.


Included with this letter is a settlement offer that I am willing to pay today to resolve this debt in one lump sum payment. The funds that I am willing to offer you today were borrowed from friends and family members who have all contributed all that they are willing to contribute to help me address my debt.


I’ve also attached my income to illustrate that it’s gone down from (amount per month) to (amount per month). I hope that you are willing to work with me on resolving this debt so that I am not forced to file for bankruptcy. I even plan on giving you guys a nice review online if you can help me out today.


Please contact me as soon as possible so that we can begin the process.

Here’s a 2nd Debt Hardship Letter (specifically for medical debt)

Medical debt hardship letter

4. Wait for the collection agency to respond back in writing or follow up with a phone call.

If you follow up via phone, click here to get instructions on how to negotiate a settlement with your creditors over the phone.

Some people may only need a temporary reduction in credit card payments. If this is the case for you, learn how to negotiate with creditors to reduce payments temporarily.

Success Case: (Debt Settlement Negotiation Letter Saving 60+%)

debt settlement letter illustrating a 60% savings


If you have an account that has a small balance of $400 for example, it’s less likely that creditor will try to sue you, over the creditor that you owe $4,000 to. It costs money for creditors to take legal action. Consequently, if you owe less, there will be less motivation involved for the creditor to sue.

Complications transpire when consumers have numerous accounts or high balances, and they attempt to settle all debts on their own.

Before you attempt to settle a debt on your own, try this national debt calculator. It is a free tool that will show you all of your debt relief options. You may decide that one of these debt relief programs is affordable and an easier route for you to take.

By using an attorney debt settlement service;

A. you have legal representation if your creditors decide to issue you a lawsuit

B. only an attorney can get the debt dismissed if your creditors break the law and violate your rights

C. creditors must stop calling and harassing you after being notified that you have attorney representation

If you do use debt settlement to get out of debt, I recommend using an attorney debt settlement service. Golden Financial Services works in amost all 50-states. Give us a call and we can let you know if your state has an attorney debt settlement program available or not.

When is it safe to settle a debt on your own?

Golden Financial Services feels that if you have one or two minor debt collection accounts, go ahead and try to settle them on your own. (i.e., if it’s under $5,000 in credit card debt or unsecured debt collection accounts, you could try to settle the debts on your own and your chances of getting sued would be small.) If you owe a Discover credit card debt, Discover is very likely to issue you a credit card summons. That is why most debt relief programs in the nation don’t even accept Discover onto the plan. Golden Financial Services does offer an attorney based debt settlement plan that will settle Discover on your behalf.

disclosure: this is not legal advice and only the opinion of Golden Financial Services.

The smaller a debt is, the less likely it is that the creditors will sue a person because there’s less motivation for the debt collection company to do the extra work required to pursue legal action. There is also a gamble that you will not be successful and that the creditors will litigate. Depending on what creditors you have will also determine the likeliness of whether or not your creditor will issue you a summons. (i.e., Discover is quick to pursue legal action and issue a person a summons to go to court.)

Best Debt Settlement Alternatives (for 2019)

Most of the time, you won’t need to use debt settlement to resolve your debt.

Is your credit score above 730?

You can use a debt consolidation loan that includes a low-interest rate to pay off high-interest debts, including secured and unsecured debt. These loans can be obtained at a local credit union. You can use a 0% balance transfer card to consolidate credit card debt and even a home equity line of credit in some cases.

Is your credit score below 730?

There are programs to consolidate credit card debt that are available and even come with credit restoration and are less expensive than debt settlement. States like MichiganIllinois, Indiana, New York and Iowa all offer a plan called debt validation. Credit card debt can get disputed before being settled and often creditors can’t prove the debt is valid.

Here are your credit card debt relief options for 2018 and 2019.

Having said that, let’s assume you’ve explored all of these other debt relief options and at this point, you’re ready to use debt settlement to quickly clear your debt.

What problems can occur when you try to settle credit card debt on your own? How can one of the best debt settlement companies assist me with avoiding these problems?


1. There is a chance that creditors will try to sue you if you have more than $10,000.00 of unsecured debt that you are delinquent on. Having a reputable debt settlement company assist you with more than $10,000.00 of debt is a superior choice over trying to settle your accounts on your own.

2. It’s emotional having your bills settled. You are in a hardship situation, where it’s a stressful moment. Most people are on the urge of bankruptcy when in this state.  That adds more stress. Creditors know that you are stressed, even if you are good at hiding it. When you have a reputable debt settlement company representing you there is no emotion involved, just pure skill and motivation to settle your accounts.

3. What about leverage? Reputable debt settlement companies have more leverage with creditors than a bank at times. A consumer only has the leverage of their creditor or creditors.  Debt settlement companies can go into negotiations basing the settlement on hundreds’ of clients worth of debt.

4. Settling credit card debt is legally putting yourself in a position that is not within the terms of your contract that you once signed with your creditors. Therefore it is imperative to have a debt settlement attorney on standby while having your accounts settled. A debt settlement attorney provides consumers with the full legal protection that potentially could be needed.  Golden Financial Services is one of the few companies in America that retain attorneys in all states for our clients.

You will never be obligated or pressured into anything.  You will always receive accurate information and advice.   Golden Financial Services is a reputable debt settlement company and by many is considered to be one of The Best Debt Settlement Companies in America.

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7 comments on “How to Negotiate Debt [4 Steps & Sample Letter]

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  6. Angelo
    April 5, 2018

    Why is it that the creditors must stop calling once notified that I have an attorney? I am contemplating if I should use an attorney debt settlement program or a non-attorney plan. And do you guys offer attorney debt settlement?

    April 11, 2018

    What if I prefer to let you guys settle my debt. I have about $32,000 in credit cards. How much would my payment be?