Settlement Agreement Letter
Instead of chasing a party for outstanding debt payments, often it is wiser to reach a mutually agreed upon settlement, which will satisfy some part of the debt, benefiting both the creditor and the debtor, and saving time on both ends.
A settlement agreement letter has legal implications and clauses involved as well, which is why it is advised that it is drafted professionally in cases where large sums of money are at stake.
However, here we will show you how to write a settlement agreement letter along with a few samples and a template you can use for your own letter.
Tips for Writing a Settlement Agreement Letter
- Clearly mention all involved parties
- Make sure the new terms of the settlement are clear and precise
- Double check all facts
- Include all relevant dates in the agreement
- Get the letter signed by both parties
Instructions
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1
Sample of a Settlement Agreement Letter #1
Subject: Settlement Agreement Letter
Date: 5/5/2014
Parties to the agreement:
Creditor: James Matthew
Debtor: Carl Jones
This letter lists out the details of the settlement agreement reached between James Matthew (Creditor) and Carl Jones (Debtor).
Carl Jones owes James Matthew a total of $10,000, which he took as loan from James on 3/2/2012, for a stipulated period of 1 year. However, Carl has been unable to make payments due to his financial conditions.
The creditor has agreed to receive a sum of $7,000 as full payment of the debt, as long as the debtor makes the payment by 5/6/2014.
If the debtor, for any reason, fails to make the payment at the aforementioned date, the creditor will be demanding full payment of $10,000, and will take legal action.
However, successful payment within the stipulated time will be considered a full and final settlement between the parties over the matter.
Signatures
Creditor:
Debtor: -
2
Settlement Agreement Letter Sample #2
Subject: Settlement Agreement Letter
Date: 2/5/2014
Parties to the agreement:
Creditor: Henry Jameson
Debtor: Fred Dillon
This letter outlines the terms and conditions of the settlement agreed upon by the Creditor (Henry Jameson) and the Debtor (Fred Dillon).
As per the original agreement between the parties, the debtor owed a total of $13,000, which was payable on 1/2/2014. However, due to the debtors inability to repay the amount, the two parties have reached a settlement agreement where the debtor will be paying a total of $9,000 within two months from the date of this agreement i.e. 2/5/2014.
If the payment is made within the agreed upon time period, it will be considered the full and final settlement of the debt. However, if the debtor fails to make the payment, this agreement will be void, and the creditor will have the right to demand full payment of the debt immediately.
Signatures
Creditor:
Debtor: -
3
Template of a Settlement Agreement Letter
Subject: Settlement Agreement Letter
Creditor: (Creditor’s name)
Debtor: (Debtor’s name)
This settlement agreement letter states the terms of the mutual agreement between the Creditor (Creditor’s name) and Debtor (Debtor’s name).
The original amount due to be paid by the debtor is ($ amount owed), which has not been paid for (number of months) since (due date).
In light of the financial hardship faced by the debtor, the creditor has agreed to accept a total of ($ amount for settlement) as full and final settlement of the debt.
However, the debtor must make the payment by (date of payment). Failure to do so will result in the cancellation of this settlement agreement and the creditor will be able to claim the full payment of the original amount.
(Any other terms here)
Signatures
Creditor:
Debtor:
