A debt settlement letter is all you need to negotiate debts with your creditors. It asks you to pay a certain settlement amount to the collection agency.Your debt settlement proposal letter must be formal and clearly state your intentions and what you expect from your creditors. Make it clear to the creditor that you intend to pay the debt. •. Explain that you are unable to pay the debt due to (detail your hardship). Here's everything you need to know about drafting and filing an Answer to a credit card debt lawsuit, with sample Answers included. I made this script for my wife. She has to call and handle some debt collection from credit cards we stupidly incurred in our early 20's then defaulted on. This article provides a template for a debt settlement proposal letter and explains what a debt settlement letter should contain. Not sure about how to counter your creditor's debt settlement offer?