The settlement of final dues between a lender and borrower can be legalized through a Debt Compromise letter. There needs to be some compromise on the interest or on principle on the amount that has been intimated and mutually agreed upon. It is legally binding and is a force over and against the debt obligation on the amount the borrower had initiated.
Through a debt compromise letter, the customer hopes to persuade the creditor to forgo the debt of the client. is. However, the customer must acknowledge his/her indebtedness to the creditor in full sum. The compromise will be a special type of contract where the debtor will consider the client’s case only after the client has submitted an application for consideration for the debt settlement. It is then the creditor’s discretion to allow compromise on the debt letter or not. This is a crucial piece of official legal document and so, must be treated with utmost care. This letter should be written immediately after the inability to pay for the debt arises.
Tips To Write A Debt Compromise Letter
- Tone: It is an official document and therefore should follow a very formal tone. Do not mention extra information that might not be relevant to the case. Keep it precise with all relevant information underlined.
- Provide Evidence: Make sure you attach a photocopy of documents related to the matter. In your letter, highlight the list of copies you have attached to it. Make sure these documents are self-attested.
- Date: Mention the date of the event, the date of the day you filed for your compromise along with a date within which you promise to repay your debt.
- Keep Copies: Make several copies of your letter along with the required documents. This will come in handy in the future.
Template
Follow the template given below to write your customized letter
Follow the template given below to write your customized letter:
Sender’s Address ______
Date ______
Receiver’s Address _____
Subject: Debt Compromise Letter
Respected Sir/Madam,
My company ____(name of the company) for the past five years has maintained good ties with ____(name of the bank).In lieu of the company’s inability to pay its debts due for the month of ____(date), I request you to consider my application and forgo my debt for the month.
I was unable to settle my debt due to _____ (mention reason), I agree to settle my debt on the following conditions:
- My debt for the month of ___(date) is forgone.
- I am allowed to pay an interest of 2% on my debt of ___(Date)
The company has always settled all its debts well in time, if not in advance and the inability to pay this month was a one off chance. I request you to kindly consider my case and grant me a debt compromise. I have enclosed my bank statement of the past six months.
Thank you
_____(Name)
_____(Contact Number)
Sample Letter
The Company
TR Road
123456, New Delhi
6th March’17
XYZ Bank
KL Road
2344553, New Delhi
Subject: Debt Compromise Letter
Respected Madam,
My company for the past five years has maintained good ties with your bank. Instead of the company’s inability to pay its debts due for the month of Jan 2017, I request you to consider my application and forgo my debt for the month.
I was unable to settle my debt due to the government’s recent announcement of demonetization under which notes of 500 and 1000 have been banned. As a result of which my company is currently facing loss. Regardless of our financial condition, we agree to settle our debt on the following conditions:
My debt for the month of Jan 2017 is forgone.
I am allowed to pay an interest of 2% on my debt of Feb 2017.
The company has always settled all its debts well in time, if not in advance and the inability to pay this month was a one off chance. I request you to kindly consider my case and grant me a debt compromise. I have enclosed my bank statement of the past six months.
Thank you
Ajay Prasad
Email Format
If you wish to file your letter via email then follow the format given below
From : In lieu ofSender’s ID (sender@email.com)
To: Receiver’s ID (receiver@email.com)
Subject: Debt Compromise Letter
Respected Madam,
My company for the past five years has maintained good ties with yInstead of the company’s inability to pay its debts due for the month of Jan 2017, I request you to consider my application and forgo my debt for the month.
I was unable to settle my debt due to the government’s recent announcement of demonetization under which notes of 500 and 1000 have been banned. As a result of which my company is currently facing loses. Regardless of our financial condition we agree to settle our debt on the following conditions:
My debt for the month of Jan 2017 is forgone.
I am allowed to pay an interest of 2% on my debt of Feb 2017.
The company has always settled all its debts well in time, if not in advance and the inability to pay this month was a one off chance. I request you to kindly consider my case and grant me a debt compromise. I have enclosed my bank statement of the past 6 months.
Thank you
Ajay Prasad