The main purpose of writing a debt settlement letter is to gain the approval from the creditors so that the debtors are able to get rid of their debts at a reduced amount. The debtors can also request the creditors to reduce the interest rate of their overdue.
Is writing letters more effective than making phone calls?
The answer is YES. Verbal communication is not that effective when you are dealing with creditors. In general, we tend to be stressful and upset when we are knee deep in debt. If we are too emotional during the negotiation process, we don't stand a high chance to get the best deal.
By writing formally to the creditors, you are able to make your main point very clear, i.e. paying off your debt in one lump sum without affecting your credit rating. The letter serves as a proof to show your intention to solve your credit problems sincerely.
When you have sent the letter to your creditors, you are actually expecting them to reply to you formally too. In another words, your letter serves as an important tool to get the response from the creditors. The creditors will definitely reply to you whether they agree to accept or reject your proposal. If they reject, you should still send them another letter to counter offer. If they accept your proposal, their letter will serve as a proof that you can get rid of your debt once you make the settlement within the time frame.
To sum up, this letter has legal effect on your debt. You are reminded to take it seriously when drafting the content.
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