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.Are you looking for the best debt settlement letter? The letter will help you get results. Here is a quick template for those looking to send a settlement offer to a collection agency or Pay for Delete. You can reach out to negotiate a debt settlement offer at any stage of the lawsuit process. First, respond the lawsuit, then send a settlement offer. You can use this letter to tell a debt collector that you receive income from Social Security or VA benefits. How to use this letter: Read the background below.