This article provides a template for a debt settlement proposal letter and explains what a debt settlement letter should contain. Your debt settlement proposal letter must be formal and clearly state your intentions and what you expect from your creditors.Debt must be 60 days delinquent prior to sending a notification letter. Send to last known address, regular mail, certified mail not required. Send this letter as soon as you can -- if at all possible, within 30 days of when a debt collector contacts you the first time about a debt. Our debt settlement agreement template helps to clearly outline repayment terms to reach a mutually agreeable solution. Use this letter to help you negotiate a full and final settlement offer with a creditor. This is a type of offer where you ask the creditor to accept part of the amount you owe and write off the rest. A good credit counselor will spend time reviewing your specific financial situation and then offer customized advice to help you manage your money. Before making a settlement offer, be sure you have enough money saved up to meet the settlement terms if the creditor agrees to your terms.