Below, we've created an example of a debt settlement proposal letter that you can use as a guide. Your letter can be sent via your preferred contact method.This article provides a template for a debt settlement proposal letter and explains what a debt settlement letter should contain. This article will make the process of responding to a debt lawsuit a little bit easier and tell you how to answer a summons for debt collection in Florida. Use this letter to help you negotiate a full and final settlement offer with a creditor. I am now experiencing financial hardship due reduced income. Use this letter to help you negotiate a full and final settlement offer with your lender. A debt settlement letter is a formal written communication between a debtor (the person or entity that owes money) and a creditor.