Debt repayment proposal letter to creditors (template)

Replace each [PLACEHOLDER] with your own figures and delete anything that does not apply. Send it by email so the offer is dated.

[YOUR FULL NAME]
[YOUR ADDRESS]
[YOUR EMAIL]  |  [YOUR PHONE]

[DATE]

[CREDITOR NAME]
Attention: Collections Department
[CREDITOR EMAIL OR ADDRESS]

RE: Repayment proposal - account number [ACCOUNT NUMBER]

Dear Sir / Madam,

I refer to my account above, with an outstanding balance of approximately
R[BALANCE]. I am committed to settling this debt and I am writing to propose a
repayment arrangement that I can sustain.

After budgeting for my essential living costs and my other obligations, I can
afford to pay R[OFFERED AMOUNT] per month toward this account.

My proposal is:
  - Monthly payment: R[OFFERED AMOUNT]
  - First payment date: [DATE]
  - Payment method: [DEBIT ORDER / EFT to your nominated account]
  - Estimated term to [clear](/debt-review/debt-clear-sa-review/) the balance: [NUMBER] months

I would also ask you to consider freezing or reducing interest and fees for the
repayment period so that my payments reduce the actual balance.

Please confirm in writing whether this is acceptable, including any agreed
interest treatment, before any payment begins. If you cannot accept it as is,
I am open to discussing a workable alternative.

Thank you for considering this proposal.

Yours faithfully,

[YOUR FULL NAME]
Account number: [ACCOUNT NUMBER]

Build a simple budget first. Add up your net income, subtract your essential living costs (rent or bond, food, transport, utilities, school fees), and subtract what you must pay on your other debts. The amount left is the most you can responsibly offer across all your accounts.

Split that remaining amount between creditors in a way that is fair and that you can hold every month. Offer a number that has a little room in it, not your absolute maximum, so that a single unexpected cost does not break the arrangement. A monthly budget template can help you arrive at a defensible figure you can show the creditor if asked.

An offer to pay R500 a month is far less useful if interest and fees add R450 to the balance every month - you would barely be reducing what you owe. Always ask, in the same letter, for interest and charges to be frozen or reduced for the repayment period.

Creditors are not obliged to agree, but many will pause or lower interest for a customer who is paying consistently, because a reduced steady payment is better for them than a handover. Get any interest concession confirmed in writing, because a verbal promise is hard to enforce later.

• Offering more than you can sustain. A proposal you break within two months damages your credibility and the account.
• Starting to pay before you have written confirmation. Get the deal in writing first so the creditor cannot later deny the terms.
• Forgetting interest. If you do not address interest, the balance can keep growing even while you pay.
• Making proposals to ten creditors separately when the real problem is that your budget does not balance. In that case, debt review gives you one coordinated, legally protected plan instead of ten fragile private deals.

Save the written acceptance, set up the debit order or a standing payment for the exact amount, and pay on or before the agreed date every month. Treat the arrangement as seriously as any other contract, because it now is one. If your circumstances improve, you can offer to increase the payment or make a settlement offer to clear the balance for a reduced lump sum. If your circumstances worsen and you cannot keep even this up, write again early rather than defaulting, and consider whether debt review is now the right step.