Debt Payment Reduction Letters


Whether trying to reduce mortgage payments or credit card debt, there are some basic things to keep in mind while writing a letter. Debt payment reduction letters should convey an acceptance of the debt, an actionable proposal on the part of the letter writer and then a follow through to reflect the commitment.

Accepting Your Debt

  • The opening of a debt collection letter may often include a statement of the understanding the debtor has in regards to the debt. This sends a message to a lender that you did your homework. A call to Capital One's Collections department emphasized the importance of this point. Ricky D., an agent with Capital One, summarizes, "When I receive a letter that clearly indicates they understand the debt and understand the debt is their responsibility, [it] opens doors to working with them cooperatively. Threatening, abusive or letters denying the debt in whole do not work." Letters should begin with a realistic statement of the debt and the its status.

Explain the Situation

  • In writing a letter, a debtor has an opportunity to offer an explanation of why the debt has become a problem. Rather than offering excuses, direct and clearly explained reasons for the situation may often bring about a better response from the creditor. Bank of America collections specialist Roza G. says, "We are human here at Bank of America. We understand things happen. It's important to let us know as soon as you can why a debt may be delayed in repayment. We can do many different things for those who are proactive in approaching us."

Offer a Reasonable Solution

  • Many lenders are willing to work with consumers who have debt problems. When a debt can be settled without extensive collection proceedings, the lender can pass savings on to consumers One way to show a serious approach to resolving a debt is to offer a solution. Explain the situation and offer to make reduced payments until the situation passes. However, expecting miracles from the lender is misguided. While a well-crafted letter might bring a point or two rate reduction or an extended grace period, begging for immediate forgiveness of the debt is less likely to succeed.

Keep the Committment

  • After writing a letter, retain a copy and include it with any correspondence with the lender. Also, keeping up commitments as outlined in the letter is crucial for success. Those who cannot keep a commitment to paying a debt, even at negotiated rates, may need to seek solace in other resources such as a Consumer Credit Counseling Service type of organization.

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