This article provides a template for a debt settlement proposal letter and explains what a debt settlement letter should contain. Below, we've created an example of a debt settlement proposal letter that you can use as a guide.Your letter can be sent via your preferred contact method. 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. Use this letter to help you negotiate a full and final settlement offer with a creditor. Not sure about how to counter your creditor's debt settlement offer? Download this free Debt Settlement Offer Letter sample. I am now experiencing financial hardship due reduced income. When drafting a debt settlement letter, you'll want to include basic information, including your name and account number.