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Debt Letter Template – 2022 Guide

debt letter template uk

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

We all know how hard it is to compose a technical document, writing a debt letter might not be the easiest job, however, you have landed at the right place to learn all about debt letters. 

In this guide, I’ll share all you need to know about debt letters and also a tried-and-tested template to help you out. 

What is a Debt Letter?

In layman’s terms, a debt letter is an official document that states the details of a particular debt that a specific person/business owes to its creditors. The document’s information will usually include the debt amount, period of payment, rate of interest, and creditor’s name.

The letter will serve the purpose of two-way communication between a debtor and a creditor.

In England, it is a requirement to send a reference before proceeding with legal action, hence, it is also known as Letter Before Action. If you fail to address this letter to the other party in the first place, forfeiture of dues may occur.

How to Write a Debt Letter?

To write an effective debt letter, you should follow these important points:

  • Use of formal language
  • Write in an authoritative tone 
  • Explain your demands
  • List all the relevant details
  • Do not threaten 

There are different types of debt letters, such as debts collection letters, debts payment messages, and many more.

Let’s discuss each of the 3 most commercially compliant debt letters individually:

  1. Debt Repayment Letter

This letter is addressed to the creditor from the debtor stating some crucial information regarding the repayment of debt. The sample letters are mostly based on these steps. 

  1. Start with your/business name, address, and date of writing 
  2. Refer to your creditor business/debt collection agency name
  3. Mention all the information related to your dues
  4. Write down your proposition for the repayment of money, you might like to include the amount of money you deem right to repay and the period of days you will be able to make the payment.
  5. While signing off, you can mention your contact number and email or simply write “Contact us at _____”

Remember: this letter is an official document and might be held as a piece of evidence if by chance the matter proceeds in court. 

2. Debt Consolidation Letter

Debt consolidation means to compile your debts against one creditor. This process is done by taking a lump sum money from a bank or a person to pay other creditors. It is a powerful way to get rid of multiple monthly payments and high-interest bills, for instance, amounts created from credit cards and hire purchase agreements. This letter is written to institutions such as banks and other creditors who offer consolidation for unpaid money.

  1. You can write your name/business name and the date 
  2. Start by addressing the bank or the individual 
  3. Request a proposal for a loan, mention the total sum you need and give a reflection of your financial situation, discuss the interest rates and other details
  4. Mention your contact details and sign off the letter

3. Bad Debt Write-off Request

In accounting terms ‘Bad Debts’ are referred to the money which has no chance of being repaid. 

This letter is a request towards the creditors to remove the amount of money liable upon you or at least review it, this might be more appropriate to send while you are facing financial constraints and downfalls. 

  1. Start with your name/business name, address, and date of writing 
  2. Refer to your creditor/agency
  3. Carry out all the information regarding your debt towards them 
  4. Explain your financial situation, the barriers of payment, and your request for the removal of dues
  5. Sign off the letter with appropriate contact details and regards. 

Please make sure that this is a request you will forward to your creditors, hence, it should be composed in a soft and pleasant tone, however, I will suggest you not to adopt a tone which demands pity.

sample letters

How Can I Write Off My Debt?

You can request the creditor to write off the dues you owe them, if they are willing to compromise on that, you might be free of that specific debt.

Here is a template letter you can use:

8 September 2020

Reference # 1234

To: XYZ Limited.
Subject: Removal of dues

Dear Sir/Madam, I regret to inform you that I am unable to pay you the money I owe, due to the recent accident I had, it is not viable for me to work and earn. I have been receiving welfare checks thanks to the county court judgment, they have been able to support my therapy and medical expenses. I would urge you with the utmost humility to please review writing off the debts I owe. 


Mr/Ms. X

Contact us at 12345678

Bank account # 12345678

*These sample letters are for informational purpose only* 

Another effective way is to seek professional management debt advice, this might allow you to create a functional way to easily write off your dues by paying them. You can seek advice from an independent charity such as StepChange or Payplan.


Do these letters work?
Yes! These letters are an effective way to communicate with your creditors. They help you solve matters with direct contact and in a pleasant way rather than taking on a legal course of action, which might have high costs and also be a reason for the deterioration in business relations.
Is it okay to get personal while negotiating with creditors?
In my opinion, being personal while negotiating with your creditors is not an effective way to close a deal, try being professional and prudent while arranging a way out with your creditors. If you have a long-standing relationship with your creditors and they have a role in your personal life, there might not be any harm to put your situation in front of them. It might be okay in this regard, however, this question has a subjective answer.
Do creditors have to write off debt if requested?
No! The creditors don’t need to write off your account if you have requested it, they are not obliged to do so. If anyone does it, it is a welcoming gesture from them.
Can I negotiate a reduction in the interest rate?
Reduction in interest rates is negotiable, however, all rights reserved to the creditor whether they accept the proposal of reduction or not.
What is the maximum allowed interest rate?
The maximum allowed interest rate in England is 25%, a rate higher than this will fall under the criminal usury act. This protection is provided under the consumer credit act of England.

Final Thoughts

Speaking from my personal experience, writing debt letters might be a struggle at first, but once you understand the core components of composing these letters, it’s actually quite simple!

If you still have any questions or confusions, drop them down in the comments below and I’ll get to them as soon as possible.


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