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.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. I am now experiencing financial hardship due reduced income. This Agreement is for the negotiation and compromise of a debt under the following terms and conditions: The Parties. Download this free sample of the debt settlement agreement template and know how to confirm the verbal debt settlement agreement in writing. Our debt settlement agreement template helps to clearly outline repayment terms to reach a mutually agreeable solution. This matter arises from fires that occurred on September 4, 2011, in. To make a debt settlement agreement, you should identify your debt owner, negotiate a settlement, and formalize the agreement in writing with all details.