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.The Consumer Financial Protection Bureau offers sample letters the debtor can use to dispute a debt. Let's take a look at an example of debt settlement in Utah. Its not hard to negotiate a settlement with debt collectors. Start low, get the agreement in writing, and be sure you owe the debt first. 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).