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.Here is a quick template for those looking to send a settlement offer to a collection agency or Pay for Delete. You have 30 days to respond to a debt lawsuit in California. To fill out this letter, clearly write your name and address at the top. Include the date and the collection agency's name and address. Upon rejecting an initial settlement offer, the next step involves drafting and presenting a counteroffer. Your counteroffer likely demands a higher sum. Most appeal and request letters require a page or two. A debt settlement letter contains a proposal offer that will hopefully open the door to negotiate a fair and reasonable debt settlement.