Request to begin debt settlement negotiations. If the collection agency or creditor rejects your offer, don't lose hope.If you reject a settlement offer, or fail to keep up with a payment arrangement, your creditor might take you to court. How to use this sample letter: 1. Read the background below. 2. Want to settle your debt? This article provides a template for a debt settlement proposal letter and explains what a debt settlement letter should contain. The party owed should include language that motivates the debtor to make payment. This is a template letter to your creditors requesting that they forgive your debt and write it off for compassionate reasons.