A debt forgiveness letter is sent to a consumer informing them that they are no longer obligated to pay a portion (or all of) their debt. It differs from a debt release letter in that it is sent to those that are still in debt, not those that have recently paid it off.
While a creditor could forgive debt for a plethora of reasons, the most common is that the value of the debt isn’t worth pursuing. Debt forgiveness often comes after the debtor has missed several payments, and before the creditor sends the debt to collections.
Sample Debt Forgiveness Letter
How to Write
Step 1 – “From” Address
The full name of the sender should be written on the first line, followed by the name of the creditor/collection agency company. The last two “From” lines are for the address of the sender.
Step 2 – “To” Address
Similar to the “From” address, the first line should be used for writing the full name of the recipient (the debtor). If the debtor is a company, the name of the company should be written on the second line (this line can be deleted or left blank if there is no company). The next two lines should be used for writing the full address of the recipient.
Step 3 – Date
Type or write the date the letter is being sent to the recipient. Ex: “August 10th, 2022”.
Step 4 – Letter Contents
The sender will need to type the full amount that is being forgiven. This can be the full (or partial) amount of the debt. Start by entering the value in words (ex: “Two-hundred dollars”), followed by the value as a number (ex: “$200.00”).
Then, describe what the original debt was for. If the debt was originally for a cable bill, this should be written (as well as the date of the original debt).
Step 5 – Signing-off
The sender should sign their name above the line that says “Sender Signature”. Although optional, signing the letter is recommended as it adds to the credibility of the document. The signature can be written by hand or by using eSign. Under the signature, the sender should write their full name, followed by the title they hold at the company (if any).