Even when the debt collection agencies call up the debtors, they also request the debtors to clear off their debt as soon as possible in full amount. However, in reality, especially since economy crisis in 2008, it seems that most of the debts are entirely negotiable.

In order to write off partial of your debts, you are advised to apply the most economical way, i.e. writing a debt settlement proposal to your creditors on your own. In order to reduce your financial burden successfully, here are some useful tips I would like to share with you.

# Tip 1: Get the right timing to submit your debt elimination proposal

You can’t simply submit your settlement proposal at anytime because if you do it at the wrong timing, your request will be rejected. The best time for you to propose settlement offer is when your past due is over 3 months but less than 6 months. This is the best time to convince the creditors to accept your proposal.

If you write in too early, say less than 3 months, the creditors do not really trust that you don’t have the ability to pay back. They may think that you have intention to take advantage from them. Hence, in order to have a favorable settlement, make sure your debt is at least 90-day old.

# Tip 2: Put your request in writing in a systematic way

Before you start writing your settlement letter, you are reminded to plan your content carefully. You need to provide your personal information and your account details in the first paragraph. Then you need to inform your creditors about the hardships you are facing in a brief manner. After that, start proposing your debt settlement plan and finally, request your creditors to remove all the negative items from your credit file.

# Tip 3: Be extra careful in conveying your messages

When you put your points in black and white, the letter serves as strong evidence. It proves that you have intention to settle your debts. Hence, you need to make sure that you have the ability to pay accordingly, i.e. pay according to your proposed settlement amount. If you don’t have sufficient fund, you MUSTN’T write the letter because you will be required to bear legal obligation with the written proposal.

# Tip 4: Show your commitment and sincerity in your proposal

In order to convince your creditors to accept your proposal, you need to show your sincerity in paying off your debt. Write a specific date which you can settle your debt if agreement is obtained from your creditors. Besides, let the creditors know how much you have on hand. Inform them your financial “limitation”.

When you have accumulated a big sum of outstanding balances in your credit card accounts and you know you have lost your financial ability to pay back, don’t feel ashamed to communicate with your creditors. You should take the positive approach to solve your problem.

Let them know your financial difficulties through letters and obtain their approval to write off your credit card debt. The whole process may involve a few negotiation letters. Don’t expect to overcome your debt issues with just one letter. Hence, you need to “sharpen” your writing skill to achieve good result.

The debtor is forced to make this payment arrangement because he or she is suffering from unavoidable financial difficulties. The main purpose of writing this letter is to assist the people in debt to get rid of their outstanding balances without declaring bankruptcies.

Here is the structure of a perfect settlement letter:

First Paragraph: Be precise

Start writing the letter by including your full name, address, contact information and your debt details. Make sure you write your account number, total outstanding balance and current interest rate clearly.

Second Paragraph: Be straightforward

Inform your credit card provider that you want to settle your debt. Give a brief explanation about why you need to settle your outstanding balance. State the difficulties you are facing in a sincere manner. It can be due to unemployment, loss of income, unexpected medical expenses, family hardship, and so on. If you have supporting documents which can be used as proofs, you are suggested to attach them with the letter.

Third Paragraph: Be specific
After explaining your financial situation, you should then inform your creditor the settlement amount you can afford to pay. In other words, you can state the debt amount you wish to be forgiven. Normally, the settlement amount proposed is 40%-60% of your total debt. At the same time, state clearly when you can begin making the payment if consent is given by the creditor. Besides, mention clearly how the payment is made, either in one lump sum or by installment.

Fourth Paragraph: Be strict

Before you come to the conclusion, you are reminded to set a condition to your creditor. You MUST state the terms carefully in order to protect yourself from any financial risk. You need to state clearly that your creditor should report your debt as “paid in full” on your credit file. Set the condition that you will only make payment after getting the assurance from your creditor in written form.

Fifth Paragraph: Be courteous

Always end your letter in a polite manner. Request an urgent attention from your creditor to look into your problem. It is always better to settle your debt as soon as possible because you need time to rebuild your credit.

For people who seldom write business letter, by following the step by step guide above, you will be able to produce a sound proposal which can lead you to a successful settlement. Credit card debt is your financial obligation. Don’t try to avoid it. Use the tactful way to overcome your problem. Be frank, writing settlement letter is 10 times better than filing bankruptcy.