Although I certainly want to continue paying on this debt, I simply cannot afford to pay the new, higher amount you are demanding. This article provides a template for a debt settlement proposal letter and explains what a debt settlement letter should contain.Want to settle your debt? You have 30 days to respond to a debt lawsuit in California. 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. Crafting a debt settlement letter properly can help you get your creditors to accept your proposal. Learn how to write correctly one now. This letter is to inform you that the validity of this debt is disputed and it is written without prejudice. Summary: Sued for debt?