Here’s a Sample Letter to Collection Agencies to Settle Debt (2024)

Sarah Edwards | April 11, 2024

Edited by Hannah Locklear

Fact-checked by George Simons, JD/MBA

Summary: Settling your debt is possible. You can draft your own debt settlement letter using our sample letter below, or start the debt negotiation process with SoloSettle to get the ball rolling on settling your debt.

Is a debt collector pursuing you for an old debt you wish was long behind you? If so, you may try to settle the obligation. Under debt settlement, you agree to pay a certain amount to the collection agency. In exchange, the collection agency accepts your payment and writes off the remaining balance.

Debts settle for 48% of the original value if the matter has not escalated to litiation yet. If there is a lawsuit filed over the debt, the average debt settlement amount increases to 85%. Collection agencies are usually more willing to accept a settlement if your debt is old and past the statute of limitations.

Collection agencies cannot sue you for a debt that passes the statute of limitations. The statute of limitations will vary depending on your state but generally ranges from two to five years.

To get the ball rolling on settling your debt, you’ll want to send the collection agency a written offer for settlement.

Debt settlement letters help resolve debts

Debt settlement is when you negotiate with your creditor and come to agreement to pay off a portion of your debt and be forgiven for the rest. Debt settlement letters are known to help start the negotiation process.

What should I include in my offer to settle a debt?

You’ll want to include specific information concerning your account in your debt settlement letter.

List your name, account information, the original creditor of the debt, and the debt collection agencies identifying information. Include the current amount you owe and the amount you’d like to offer to settle the debt.

Most importantly, request a debt settlement agreement letter that declares the debt will be reported as paid to all the credit reporting bureaus once you’ve fulfilled your side of the agreement. To summarize, include these points in your debt settlement letter:

Your offer to settle the debt should be clear and straightforward. It should express that you’re willing to offer partial payment to eliminate the obligation.

How much should I offer in my debt settlement letter?

60% is a good place to start, but the amount varies based on your financial situation and the collection agency who is suing you.

Like we mentioned before, the average debt settlement is 48% for pre-lawsuit debts and 85% for debt lawsuits, but note that each debt circ*mstance is unique. In our experience, however, debt collectors and law firms are more likely to accept a settlement of around 70%.

Most collection agencies purchase old debts from creditors for a small fraction of their original value. It’s not uncommon for collectors to pay only 5 or 10% of a debt in exchange for the right to pursue collection activities against you.

Let's look at a debt settlement example.

Example: If you have an old credit card balance of $5K with JP Morgan and decide to sell it to a debt collector, the collection agency may pay only $250 to $500 for your balance. JP Morgan will provide the collector with basic information about your account, like your contact details and the balance due. Once the collection agency owns your account, they’ll send you letters and start calling you to obtain the original value you owe. You can stop further collection activity by offering to settle the debt for a fair price. Offer what you feel you can afford to pay and see if the collection agency is willing to accept.

Use this sample debt settlement letter

You might be wondering how to write a good settlement offer letter. We’ve got you covered.

SoloSettle uses a tech-based approach to draft and send settlement offers to creditors and debt collectors. The offer letter includes all the important legal wording necessary to protect your rights and show collectors that you know your stuff.

Alternatively, you can use this settlement sample letter to help you draft one on your own:

Does the collection agency have to accept my settlement offer?

No, they do not have to accept your offer. However, most collection agencies are willing to take less for your obligation, especially if they don’t think you’ll be able to pay the entire amount.

If the collection agency believes they have grounds to sue you for the debt in court, they may pursue a lawsuit against you. If that is the case, you can still potentially settle the account on your own with the help of SoloSettle.

In most cases, working with a collection agency can prevent your account from snowballing into a lawsuit. Debt collectors are often willing to come to a favorable arrangement if you initiate the process, even if it’s before they take you to court. You’ll be able to move on without fear of harassing phone calls or stressful letters.

Use SoloSettle to settle your debt on your own

SoloSettle’s goal is to empower you to negotiate and reach a debt settlement on your own.

With SoloSettle, negotiating a settlement becomes easy due to our structured process. Use our web-app to send and receive offers from collectors. SoloSettle drafts offers for you and protects you from the potential lies and bullying of debt collectors.

Most importantly, SoloSettle makes sure all of the proper legal language is included to protect your rights when communicating with the creditor or debt collector. When a settlement agreement is reached, SoloSettle manages the settlement agreement documentation for you and protects your sensitive financial information from the collectors, preventing them from over-charging you.

Avoid working with debt settlement companies, who don’t always have your best interest at heart.

Check out this review from a real SoloSettle customer:

“I'm very thankful for SoloSettle. Having a third party negotiate the settlement was instrumental in resolving this case and saved me from two giant headaches: 1) I didn't have to deal with the plaintiff's lawyer and 2) I didn't have to go to court. I also love that the payment was processed through SoloSettle. I was nervous about sharing my personal financial data with the other side, but SoloSettle protected that for me. I hope I never get sued again, but if I do, I would use SoloSettle again in a heartbeat. SoloSettle really saved me a ton of time and heartburn and kept me from having to be my own lawyer in court.” - Dan

Settle your debt on your own with SoloSettle.

Check out this video to learn more about how to settle a debt:

What is SoloSuit?

SoloSuit makes it easy to fight debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)

How to answer a summons for debt collection in your state

Here's a list of guides for other states.

All 50 states.

• Alabama
• Alaska
• Arizona
• Arkansas
• California
• Colorado
• Connecticut
• Delaware
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Mississippi
• Missouri
• Montana
• Nebraska
• Nevada
• New Hampshire
• New Jersey
• New Mexico
• New York
• North Carolina
• North Dakota
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• Tennessee
• Texas
• Utah
• Vermont
• Virginia
• Washington
• West Virginia
• Wisconsin
• Wyoming

Guides on how to beat every debt collector

Being sued by a different debt collector? Were making guides on how to beat each one.

• Absolute Resolutions Investments LLC
• Accredited Collection Services
• Alliance One
• Amcol Clmbia
• American Recovery Service
• Asset Acceptance LLC
• Asset Recovery Solutions
• Associated Credit Services
• Autovest LLC
• Cach LLC
• Cavalry SPV I LLC
• Cerastes LLC
• Colinfobur
• Covington Credit
• Crown Asset Management
• CTC Debt Collector
• Cypress Financial Recoveries
• Delanor Kemper & Associates
• Eagle Loan of Ohio
• Educap
• Estate Information Services
• FIA Card Services
• Forster & Garbus
• Freshview Solutions
• Fulton Friedman & Gullace LLP
• Harvest Credit Management
• Howard Lee Schiff
• Hudson & Keyse LLC
• Integras Capital Recovery LLC
• Javitch Block
• Jefferson Capital Systems LLC
• LVNV Funding
• Mannbracken
• Mariner Finance
• Medicredit
• Michael J Adams PC
• Michael J Scott
• Midland Funding LLC
• Mullooly, Jeffrey, Rooney & Flynn
• Mountain Land Collections
• MRS Associates
• National Collegiate Trust
• Nationstar Foreclosure
• Northstar Capital Acquisition
• NCEP LLC
• NRC Collection Agency
• OneMain Financial
• Palisades Collection LLC
• Pallida LLC
• Paragon Revenue Group
• Pinnacle Collections Agency
• PMAB LLC
• Portfolio Recovery Associates
• Provest Law
• PYOD LLC
• Reunion Student Loan Finance Corporation
• Revenue Group
• Regents and Associates
• RSIEH
• Salander Enterprises LLC
• Second Round Sub LLC
• Security Credit Services
• Sherman Financial Group
• Suttell and Hammer
• T-Mobile
• Transworld Systems
• Tulsa Teachers Credit Union
• UCB Collection
• Velo Law Office
• Velocity Investments
• Waypoint Resource Group
• Weinberg and Associates
• Wolpoff & Abramson

Win against credit card companies

Is your credit card company suing you? Learn how you can beat each one.

• Bank of America
• Capital One
• Chase
• Credit One Bank
• PayPal Synchrony Card
• SYNCB/PPEXTR
• Synchrony Bank
• Target National Bank
• Wells Fargo

Going to Court for Credit Card Debt — Key Tips

How to Negotiate Credit Card Debts

How to Settle a Credit Card Debt Lawsuit — Ultimate Guide

Get answers to these FAQs

Need more info on statutes of limitations? Read our 50-state guide.

Why do debt collectors block their phone numbers?

How long do debt collectors take to respond to debt validation letters?

What are the biggest debt collector companies in the US?

Is Zombie Debt Still a Problem in 2019?

SoloSuit FAQ

If a car is repossessed, do I still owe the debt?

Is Portfolio Recovery Associates Legit?

Is There a Judgment Against Me Without my Knowledge?

Should I File Bankruptcy Before or After a Judgment?

What is a default judgment?— What do I do?

Summoned to Court for Medical Bills — What Do I Do?

What Happens If Someone Sues You and You Have No Money?

What Happens If You Never Answer Debt Collectors?

What Happens When a Debt Is Sold to a Collection Agency

What is a Stipulated Judgment?

What is the Deadline for a Defendants Answer to Avoid a Default Judgment?

Can a Judgement Creditor Take my Car?

Can I Settle a Debt After Being Served?

Can I Stop Wage Garnishment?

Can You Appeal a Default Judgement?

Do I Need a Debt Collection Defense Attorney?

Do I Need a Payday Loans Lawyer?

Do student loans go away after 7 years? — Student Loan Debt Guide

Am I Responsible for My Spouses Medical Debt?

Should I Marry Someone With Debt?

Can a Debt Collector Leave a Voicemail?

How Does Debt Assignment Work?

What Happens If a Defendant Does Not Pay a Judgment?

How Does Debt Assignment Work?

Can You Serve Someone with a Collections Lawsuit at Their Work?

What Is a Warrant in Debt?

How Many Times Can a Judgment be Renewed in Oklahoma?

Can an Eviction Be Reversed?

Does Debt Consolidation Have Risks?

What Happens If You Avoid Getting Served Court Papers?

Does Student Debt Die With You?

Can Debt Collectors Call You at Work in Texas?

How Much Do You Have to Be in Debt to File for Chapter 7?

What Is the Statute of Limitations on Debt in Washington?

How Long Does a Judgment Last?

Can Private Disability Payments Be Garnished?

Can Debt Collectors Call From Local Numbers?

Does the Fair Credit Reporting Act Work in Florida?

The Truth: Should You Never Pay a Debt Collection Agency?

Should You Communicate with a Debt Collector in Writing or by Telephone?

Do I Need a Debt Negotiator?

What Happens After a Motion for Default Is Filed?

Can a Process Server Leave a Summons Taped to My Door?

Learn More With These Additional Resources:

Need help managing your finances? Check out these resources.

How to Make a Debt Validation Letter - The Ultimate Guide

How to Make a Motion to Compel Arbitration Without an Attorney

How to Stop Wage Garnishment — Everything You Need to Know

How to File an FDCPA Complaint Against Your Debt Collector (Ultimate Guide)

Defending Yourself in Court Against a Debt Collector

Tips on you can to file an FDCPA lawsuit against a debt collection agency

Advice on how to answer a summons for debt collection.

Effective strategies for how to get back on track after a debt lawsuit

New Hampshire Statute of Limitations on Debt

Sample Cease and Desist Letter Against Debt Collectors

The Ultimate Guide to Responding to a Debt Collection Lawsuit in Utah

West Virginia Statute of Limitations on Debt

What debt collectors cannot do — FDCPA explained

Defending Yourself in Court Against Debt Collector

How to Liquidate Debt

Arkansas Statute of Limitations on Debt

Youre Drowning in Debt — Heres How to Swim

Help! Im Being Sued by My Debt Collector

How to Make a Motion to Vacate Judgment

How to Answer Summons for Debt Collection in Vermont

North Dakota Statute of Limitations on Debt

ClearPoint Debt Management Review

Indiana Statute of Limitations on Debt

Oregon Eviction Laws - What They Say

CuraDebt Debt Settlement Review

How to Write a Re-Aging Debt Letter

How to Appear in Court by Phone

How to Use the Doctrine of Unclean Hands

Debt Consolidation in Eugene, Oregon

Summoned to Court for Medical Bills? What to Do Next

How to Make a Debt Settlement Agreement

Received a 3-Day Eviction Notice? Heres What to Do

How to Answer a Lawsuit for Debt Collection

Tips for Leaving the Country With Unpaid Credit Card Debt

Kansas Statute of Limitations on Debt Collection

How to File in Small Claims Court in Iowa

How to File a Civil Answer in Kings County Supreme Court

Roseland Associates Debt Consolidation Review

How to Stop a Garnishment

Debt Eraser Review

Do Debt Collectors Ever Give Up?

Can They Garnish Your Wages for Credit Card Debt?

How Often Do Credit Card Companies Sue for Non-Payment?

How Long Does a Judgement Last?

​​How Long Before a Creditor Can Garnish Wages?

How to Beat a Bill Collector in Court