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Debt Settlement Letter

When a defaulter does not pay the loan installments, usually after negotiations, a particular amount of the loan is agreed to be repaid by the debtor. After the debtor makes the necessary payments, he is issued a debt settlement letter by the concerned authorities.

The following tips will help you to write a debt settlement letter:

1. The exact amount paid by the debtor should be mentioned in the letter.

2. The letter should be short, precise and clear.

Debt Settlement Letter Sample



Raju Kulkarni,

34, bank Street,



Dear Mr.Kulkarni,

This letter is to inform you that the loan you owed to the bank is cleared after negotiations. You have made a payment of 90 percent of the total loan amount which is Rs 4,45, 450. We understood your genuine concerns over the non repayment of the loan amount and discussed with our legal officer. We spoke to you several times and gave you enough time to repay the suggested amount.

We are happy to receive payment from your side within the stipulated time. You are free from anymore repayments towards your loan. This letter can be considered as a clearance letter and you will receive a letter by our legal consultant as well.

We seek fruitful association in future

Thanking you,


Yours Sincerely,

Praveen Mistri

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