Debt Settlement Agreement Sample

Letter for Debt Settlement Agreement

What is a Debt Settlement Agreement?

Debt settlement is working with creditors to decrease the amount of debt that you owe. The debt settlement agreement is a written, legally binding agreement to decrease your debt through debt settlement, what happens if you default, and what happens after you pay back the settled amount.

Sample Debt Settlement Agreement Template for Download

Letter for Debt Settlement Agreement Template

Since you are looking at Pacific Debt’s website, you may be considering debt settlement as a hardship option. Many people want to know if they need to work with Pacific Debt, Inc. in order to settle their debt. The answer is no, but there are some very good reasons for you to work with us that will save you a ton of time, and most likely, a ton of money! Let’s look at how to go about debt settlement yourself.

How to Negotiate Your Own Debt Settlement

Before you get started, you need to have a strategic plan in place.

  1. Are You Current or Behind on Payments? How old is your debt? Debt settlement works best if you are NOT current on your payments. If you are making payments on time, creditors may assume that you are capable of paying back your debt. A creditor may be more willing to negotiate a settlement if you are behind on making payments. Read our article on How to Deal With Debt Collectors When You Can’t Pay
  2. Collection Information. You may have more than one delinquent debt. Get a notebook and set up separate sections for each debt. Include the company, the amount, the interest rate, the debt’s age. Every time you have contact about that debt, write down the details, including the name of the person who called, date and time. Decide which debts need to be paid first. It might be the least amount, the highest interest rate or other factors.
  3. Make a Repayment Timeline. Your plan should allow you to repay your debt within 24 to 48 months. Pacific Debt Inc estimates that it will take someone using our service to take 24 to 48 months, depending on your unique circumstances.
  4. Consider Selling Assets. Identify anything you can sell to raise some money. If you do, put it in a separate savings account so you don’t spend it. Pacific Debt Inc. helps set up an escrow account for you if you use our service. The goal is to have a lump sum built-up over time to settle your debt.
  5. Contact the Creditor or Collection Agency. Using your notebook, contact the creditors. Explain why you can’t pay the bill. DO NOT share bank account information or other personal financial information. Do not make promises. And importantly, don’t lose your temper! They want you to be emotional. If the company is interested in settling, they may offer a higher settlement amount. If you want to continue negotiating with them, suggest a different, lower amount. Pacific Debt Inc. knows which creditors or collection agencies are willing to negotiate and which ones don’t. It is a benefit of using our service! We have long-standing relationships established with most creditors.
  6. Consider Your Tax Consequences. Debt settlement can have some tax consequences. Since we’ve already discussed these in detail in a previous article, here is a summary. Basically, the IRS may treat the charge-ff amount (the debt settlement) as income for you. You may need to include a form 1099-C with your taxes. If you don’t, you may end up giving more money to the IRS than you need to.
  7. Get It in Writing. Click this link to find a sample debt settlement agreement. Do not make a payment until you have a debt settlement agreement signed by the company and in your possession.

Filling out the Debt Settlement Agreement Template

Here are some tips for filling out the letter of agreement for payment of debt.

  • The effective date is the date you make this agreement.
  • The creditor is the person you owe money to or the collection agency.
  • The debtor is you.
  • The outstanding debt is what you actually owe.
  • The sum is what you agree on.
  • The creditor will expect you to make payment by the specified date. If you don’t have the money to pay it, make sure that you factor that in.
  • The valid date is the date you agreed to pay the debt back.
  • Make two copies. Sign both and send to the creditor. They should sign and then return it.
  • Keep your agreement to pay letter in a safe place!

**We are not legal experts and have prepared this payment agreement template to only be used as a sample. It’s only intended to be a sample and it’s not meant for actual use. You should contact a legal expert in your area to discuss your options if you are intending to do a debt settlement yourself.

Should You Try Debt Settlement Yourself?

The answer to if you should DIY debt settlement or hire debt professionals like us depends on you. Only you can answer that question. If you choose to do it yourself you will have to do all the negotiating, paying, saving, and dealing with debt collectors. It can be extremely frustrating, upsetting, and requires a massive amount of time on the phone, as well as organization and patience.

Find out why Pacific Debt has been ranked as one of the “The Best Debt Settlement Companies of 2019”.

Debt settlement is not an easy process to go through by any means. If you don’t want to try debt settlement yourself, you can contact Pacific Debt Inc. Our debt settlement experts will help you understand all your options and the initial consultation is 100% free. We’ll do all the work and keep you updated throughout the entire process.

If you’d like more information on debt settlement or have more than $10,000 in unsecured debt that you can’t pay,contact Pacific Debt, Inc. We may be able to help you get out of debt in 2 to 4 years with our debt relief program. We have settled over $250 million in debt for our customers since 2002.

Pacific Debt, Inc is accredited with the American Fair Credit Council and is an A+ member of the Better Business Bureau. We rate very highly in Top Consumer Reviews, Top Ten Reviews, Consumers Advocate, Consumer Affairs, Trust Pilot, and US News and World Report.

For more information, contact one of our debt specialists today. The initial consultation is free, and our debt experts will give you all your options.


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