Debt settlement letters are very important because they set terms to help you rid yourself of debt. They're a binding contract and can help fix your credit rating if done correctly. There are a number of things that should always be included in one of these letters to make sure you aren't setting yourself up for trouble. Here's an overview of what you need to include along with a sample letter.

Always make sure your name, address and zip code are located on the letter, along with today's date. The collector's name and address should follow, along with your account number. Address the letter to someone helpful you spoke with by phone if possible. Explain your debt situation and what you plan to do. List the amount of debts you have and what you can do to improve your chances of repayment, such as a new job. Be sure to include a proposed settlement amount, along with your terms. When you receive a letter back agreeing to your terms, include a payment. Sign the letter and date it.

Your name
Address
City, State and Zip
Today's date

Creditor Name
Address
City, State and Zip

Re: Your Name
Creditor's Account Number
Your Social Security Number

I (name) wish to settle the outstanding debt with (creditor). (Explain why you've fallen into debt.) I strongly wish to pay back this debt.

Currently, the outstanding debt balance is (dollar amount). I am willing and able to settle this amount for (amount you can afford to pay). As part of this settlement I am making the following requests:

My account will be shown paid in full.
Any ligitation is dropped.
All negative listings will be deleted from the three credit bureaus below.
Equifax
Experian
TransUnion

Upon acceptance of this letter (creditor name) agrees to the terms and settlement conditions and I (name) will send an overnight money order in the amount of (settlement amount) paid to (creditor name).

(Creditor name) agrees to forward this letter to the three credit bureaus listed so negative listings may be deleted.

(Print Your Name) (Print Date)
(Sign your name)