Anytime you owe a debt, but are unable to meet the currently agreed-on payments to the lender, you can write up a payment agreement letter. This document needs to meet your needs not the lender's, according to the Fair Debt Collection website (see Resources). It offers the lender a revised repayment plan based on your current financial situation. The lender doesn't have a legal obligation to accept the new terms. It may reject your letter and demand payment in full.
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Start the letter by opening a new page in a word processing program. Type today's date at the top right hand corner of the page. Press return a couple of times, and move over to the left margin. Type your name and complete return address.
Tell the recipient what your letter is regarding. Press return a couple more times and add the name of the contact person and the lender's name and address. Skip two lines and type "Re:" and the subject of the payment agreement letter. For example, "Re: Account Number 1234567890."
Be professional. Begin the agreement letter with a business greeting. Then, state what the balance of the debt is, according to the Fair Debt Collection website (see Resources). Explain briefly that you can't make the current payments. Tell the lender how much you can afford and on what day of each month you can send the payment.
Tell the debt collector in the next paragraph that you'd appreciate a phone call confirming they accept the new loan repayment terms. Type that if they cash the enclosed check, you'll consider that act as an acceptance of your proposed plan. Add that if they reject your letter, they need to return the payment in the self-addressed, stamped envelope you provided.
Add to the next paragraph, "As a show of good faith I've enclosed my first payment in the amount of $__ ", according to the Fair Debt Collection website (see Reference). Then, tell the debt collector that if your financial situation improves, you'll contact them about increasing your payments.
Wrap the letter up. Skip a couple lines from the last paragraph. End the payment agreement letter with "Sincerely," and skip four lines. Type your name underneath. Proofread the letter; then print it out. Sign it and make a copy for your files before you send it.
Tips and warnings
- Always make this request in writing, and never just verbally, says the State of California, Office of the Attorney General (see Resources).
- Send the payment agreement letter by certified mail so you have proof they receive it.
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