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. You have 20 days to respond to a debt lawsuit in Arizona. A debt settlement letter is a formal written communication between a debtor (the person or entity that owes money) and a creditor. A creditor to whom a consumer owes a debt may ask the consumer (the debtor) to agree to a settlement that includes a stipulated judgment. Struggling with debt? Our Tucson debt settlement attorneys can help you negotiate lower payments and regain financial stability. Struggling with debt? Our Tucson debt settlement attorneys can help you negotiate lower payments and regain financial stability.