This article provides a template for a debt settlement proposal letter and explains what a debt settlement letter should contain. 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. List your name, account information, the original creditor of the debt, and the debt collection agencies identifying information. I am now experiencing financial hardship due reduced income. We've settled debts with most major lenders. Here are examples of the letters we have sent that have worked for our clients. Your debt settlement proposal letter must be formal and clearly state your intentions and what you expect from your creditors. Below is a sample settlement letter from the paying agency to the OAG authorizing the settlement or judgment and amount of the claim. Use this letter to help you negotiate a full and final settlement offer with a creditor.