When your debt has become unbearable, it is time for you to draft a settlement proposal to your creditors to propose for debt settlement. A good settlement letter plays an important role in assisting the debtors to reduce their outstanding balances in a legal way. After the debt is settled, the debtors can become debt free "permanently".

What are the key elements you need to include in this letter to ensure a successful debt reduction process?

1) Your personal information

You need to include your full name, your correspondence, your contact number, your account details as well as your total debt amount in the letter.

2) The financial hardships you are currently facing

It is important for you to inform your creditors about your financial situation. Explain to them the main reason that you fail to repay your debt in a brief manner. If you have supporting documents, attach them with the letter to serve as proofs.

3) Your proposal to overcome your debt problem

State your offer clearly. Write down the settlement amount you can afford to pay as well as the date which you can make the payment. Bear in mind that you need to request for debt reduction in a polite manner. Don't use threatening words in your letter.

4) Your request on how your debt is reported on your credit file

When you settle your debt through debt negotiation, it is indeed hard for you to protect your credit score. However, you can "minimize" the bad effect. It can be done through the settlement letter. You can request from your creditors to remove all the negative items from your credit file once you have cleared off partial of your debt.

In order to negotiate with your creditors directly, you can contact them and negotiate with them through phone. However, the verbal communication is not sufficient to complete the settlement process as there is no written record. It is unsecured for you as a debtor to make the payment to your creditors. A successful process will only be completed when a debtor sends in a settlement letter to the creditors and the creditors agree with the proposal by sending back a written agreement. Hence, you should only proceed to make your payment after you have received the confirmation from your creditors. This is to ensure that there is no further collection action to be taken by other debt collection agents in the future.
For more information on Debt Consolidation you can visit: Debt Consolidation Headquarters