When you find yourself mired down in debt but do not wish to use a debt consolidation company, one option available to you is to communicate directly with your creditor by sending a debt settlement letter. This is an offer by you to renegotiate payments to something you can afford so that you can save your credit rating and repay the company simultaneously.

A good letter makes it clear that you intend to repay your debt and states why you can not afford the current payment schedule. It should be straight to the point and not ask for pity. These companies are not worried about your life situation, and want only to know how and when they will be repaid. When crafting a debt settlement letter, be brief but make sure you offer something that is affordable to you and beneficial to the company at hand.

One good tip when crafting a letter is to offer a reasonable rate of interest. Ask that the minimum payments be lowered and that the debt stop accruing its current interest rate. Offer a significant payment each month and an interest rate that is affordable to you. If possible, outline a repayment schedule that shows when the loan will be fully paid off. Offer to pay a portion of accrued interest, but do not feel obligated to pay all of it.

When writing your debt consolidation letter, know that your offer must appeal to the company. While you will likely not be allowed to pay less than your original credit line, you can often convince a company to agree to your credit limit and a significantly smaller amount of interest than they have actually charged you. Make an offer that is appealing to both you and the creditor.

When you compose and send a debt settlement letter, understand that even if it is not accepted, it can be effective. In many situations where offers are not accepted, it opens the floor for negotiations, and the creditor will make a secondary offer that will likely involve significantly lower payments than were initially demanded.

In short, a properly worded letter with a reasonable offer is likely to help you quickly resolve your debt at a rate you can afford. Even when this does not work, it shows good faith and makes a company more likely to work with you to resolve your debt without doing further damage to your credit. Debt settlement letters are an effective way to prevent credit damage and may work to stop debt from continuing to accrue.