This article provides a template for a debt settlement proposal letter and explains what a debt settlement letter should contain. Use this letter to help you negotiate a full and final settlement offer with a creditor.You can document the previous interactions, formally offer to resolve the matter, and emphasize what you'll do if the demand isn't met—usually filing a lawsuit. A debt settlement letter should include the date, your name and contact information, the creditor's name and contact information, the total amount of the debt, INSTRUCTIONS: Fill out completely Parts 1 through 5. Use this letter to help you negotiate a full and final settlement offer with your lender. However, if the issue involves a small claims court, this could result in a settlement. Both are legally binding on all parties. Property settlement agreements address the division of property in a divorce. But at some point in the process, the judge may suggest settlement.