This article provides a template for a debt settlement proposal letter and explains what a debt settlement letter should contain. If you disagree with an individual or a company, and informal efforts to resolve your dispute fail, you should write a demand letter.Your debt settlement proposal letter must be formal and clearly state your intentions and what you expect from your creditors. If your lender agrees to settle a debt for less than you owe, you'll need a written agreement of the terms. Use this letter to help you negotiate a full and final settlement offer with a creditor. All settlement conferences are confidential. That means no court reporter is present, and offers of settlement are not allowed as evidence at trial. In some cases, the outstanding debt amount may be too much for the debtor to manage, and continuing payments may force them into bankruptcy. Sample Letters to Dispute Debt. " Sample Dispute Letter.