Writing an Unable to Pay Debt Letter (with Sample) (2024)

There are many reasons why someone may not be able to pay their debts. If this is the case, it is in their best interests to send a debt letter to their creditors as soon as they realize they will not be making payments.

​Many creditors appreciate an honest and timely declaration from a borrower and will be willing to work with the individual to find a solution to their debt.

It is not recommended to discuss debt payment over the phone because putting the proposal in writing provides the debtor proof that they are trying to resolve the situation. A credi

tor could agree to certain conditions over the phone and later want to change them.

​Several Ways to Deal with Debt
​
There are several different ways consumers can deal with debt they are having difficulty paying. They can offer a one-time payment to write off the debt, they can defer making payments for a specific time period and they can ask that thedebt be forgiven.​

Unable to Pay Debt Letter (Free Sample)

Unable to Pay Debt Letter (Free Sample)

​It may be embarrassing to write a letter, because the consumer has to tell about their sad situation and request help. However, the hardship is not the only important thing about request. Most creditors are happy to get any payment on unsecured debt and will view the request favorably.​
​
​An unable to pay debt letter is requesting that the debt be considered repaid with a specific offer from the borrower that is not the full amount of the debt. In this type of letter, it is recommended that the borrower put in details about their hardship.

​

• Unable to work due to illness
• Unexpected medical bills
• Loss of job
• Reduced income
• Failed business
• Death in the family
• Job relocation
• Divorce
• Incarceration
• Military duty
• Property damage​​

Unable to Pay Debt Letter (Free Sample)

The consumer should not believe that they deserve a settlement. The creditor will decide if they deserve one or not. The letter is to convince the creditor to accept a settlement.

​The consumer should strike a balance between giving too much hardship information and not enough. Too much information could work against the consumer and too little may look like there really isn’t much hardship.

​There are three main things that need to be included in the letter:

• Why the consumer could not afford to pay their debts and any steps they have taken to resolve the matter
• The consumer’s current financial situation and other assets
• How much money the consumer can offer as a settlement

Some tips for writing the debt letter:

• It should be on one page
• It should give financial information such as income, rent, and food
• It should be courteous and polite; after all it is requesting help
• It should give some personal details such as medical conditions
• For a settlement letter, a clear offer should be given
• If the debts are old, creditors are usually happy to accept any offer of payment
• The letter should be addressed to the person in charge of the consumer’s account
• A written agreement should be requested

​Debt Forgiveness

If the consumer is not in a position to make any payment on their debt, they may request to have the debt forgiven. This is usually only possible if there is no way the creditor can collect payment. For example, they cannot enact income garnishments on Social Security benefits, workers’ compensation or unemployment payments.

​This letter should conclude with an honest apology for not being in a financial position to pay as agreed. All types of debt letters should include a request for a response in writing.

Here are sample debt letters for a settlement. It is important to keep copies of all documents and letters that are exchanged in this type of transaction. The letter should be sent by certified mail, so the sender has proof that it was received.

​Unable to Pay Debt Letter Sample
Name of Consumer
Address of Consumer
City, State, Zip Code
Account Number of Consumer

DATE

Name of Creditor Company Supervisor
Name of Company
Address of Company
City, State, Zip Code

Dear Name of Creditor Company Supervisor,

I am writing this letter to inform you that I am temporarily out of work, which has caused serious financial difficulty for my family. I have workers’ compensation as well as unemployment, but these are just enough to pay my mortgage and feed my family.

Because of my hardship, I am asking each creditor to kindly accept a reduced payment of $100 for the next six months. I expect to be back to work and receiving my full salary by that time. If I am able to work sooner, I will inform you and return to making the usual payments of $250 per month.

I prefer to deal with you directly and not a collection agency. I fully intend to pay my debts, but I need a bit more time. I also request that you withhold any interest on my debt for the next six months.

Please send a response to this letter in writing at the address above. I can also be reached at 555-123-4567 and at Name@email.com. Thank you for taking the time to consider my request, and I hope to have a favorable reply.

Sincerely,

Signature of Consumer
Printed Name of Consume

​Unable to Pay Credit Card Debt Letter
Name of Consumer
Address of Consumer
City, State, Zip Code
Account Number of Consumer

DATE

Name of Credit Company
Address of Credit Company
City, State, Zip Code

Dear (ENTER NAME),

My name is (YOUR NAME) and I am writing in regards to account (NUMBER) for which I owe (AMOUNT). I cannot pay this amount as my family has fallen under hard time in recent months, but we do want to settle this in a fair and just manner so that you can have the money you deserve and we can be relieved of the burden of owing you this debt.

On (ENTER DATE) I spoke with (ENTER NAME OF PERSON ON PHONE) and he/she said that we could settle this debt for (ENTER 1/4 OF THE AMOUNT), which I can pay by check if you can please send me an agreement to this amount in writing.

Please know that I have appreciated the patience and professionalism that your staff has given in this process, and that this correspondence has been sent,

Sincerely,
​
[YOUR NAME SIGNED]
[YOUR NAME TYPED

​
​Unable to Pay Credit Card Debt Letter
When people owe on a credit card account that has gone into collections, it is not uncommon to find that the collection agency will settle for a lesser amount.

Unable to Pay Credit Card Debt Latter
Name of Consumer
Address of Consumer
City, State, Zip Code
Account Number of Consumer

DATE

Name of Creditor Company Supervisor
Name of Company
Address of Company
City, State, Zip Code

Dear Name of Creditor Company Supervisor,

I am writing about an account that is in collection with your company. The account number on my statement is 189478593. The original creditor was Capitol Credit Cards and the Visa account number for that card was 4419-0389-3894-0987. The account has not been paid on in almost two years and I want to correct this matter.

When the economy tanked, I lost my job and also suffered from health problems. I didn’t have the money to pay my bills and this account soared from $500 to $2,000 with late fees and interest. I want to settle the account for the original amount owed $500. I have the money from a small settlement I received from my back. I am unable to return to work, but I still want to make this debt right.

Upon your approval, I will immediately release funds in the amount of $500 and settle this account. Please contact me if you have any questions. I can be reached during the day at 555-980-7390. I look forward to resolving this matter.

Sincerely,

Signature of Consumer
Printed Name of Consumer

​​By Andre Bradley

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