Debt Negotiation Letter



A debt negotiation letter is written by a debtor to the bank requesting a significant action on a loan that the debtor has taken out. The letter is usually written if the debtor is unable to pay back the debt and if the deadline for such payback is nearing. The letter is written by the debtor his/her legal representative. The debtor is requesting a negotiation of terms to pay back the debt, and it is not a debt waiver letter.

The letter must be written in a coherent and transparent manner. The debtor must mention with great clarity the reason for requesting such a negotiation. The letter must include a clear reason as to why the debtor is unable to pay back the debt under normal circumstances. The letter should mention what the debtor expects of the bank. The letter should also mention the acceptability of the bank and its written permission to carry out such negotiation.

Sample Letter

The following is a sample Debt Negotiation Letter.


Rajesh Koothrappali,


Philadelphia Hill,





Sheldon Cooper,

Manager- Loans,

East Bank,


Philadelphia Hill,



Subject: Debt negotiation letter.

Dear Sir,

I write this letter to inform you that I have taken a loan from your bank on DD/MM/YYYY and the due date for that loan to be paid off is DD/MM/YYYY. I am unable to meet the last installment of the loan because of compelling personal reasons. I wish to request a negotiation from your end.

I am unable to meet the deadline because I am a full-time student and I had to pay my university fees in May, without which my registration at the university may have been terminated. I have written a letter to the manager of my bank, but he directed me to write a letter to you because you are the manager of the loan department at East Bank.

The several months have been a great financial challenge to me as I have a very limited source of income. I also have a liability to pay back my debts that have been accrued in your bank. I have submitted requests for scholarship and bursaries to universities, and I have failed to secure the same.

I would like to request you to kindly extend the deadline for the payment of fees until DD/MM/YYYY. I will be fully capable of paying the last installment after this date. As collateral, I wish to submit a property document in my name on the condition that it will be released upon payment of the last installment.

I have cleared all the installments and dues on time, and I request you to provide leniency with this one installment.

Thank you,


Rajesh Koothrappali.

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