Your debt settlement proposal letter must be formal and clearly state your intentions and what you expect from your creditors. This article will explain how to handle debt settlement on your own and how to write the best debt settlement letter possible.Use this letter to help you negotiate a full and final settlement offer with a creditor. Have you recently settled a debt and are searching for a paid in full letter? Good news, we've got two free sample form letters below. 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. Not sure about how to counter your creditor's debt settlement offer? Download this free Debt Settlement Offer Letter sample. Use this letter to help you negotiate a full and final settlement offer with your lender.