Letter accepting a proposal to settle a debt

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What's a letter accepting a proposal to settle a debt and when do you need it?

You should use this letter if your business is owed a debt by another business, that business has proposed a way to settle the debt and you intend to accept the proposed arrangement.

This letter is not a legally binding agreement on you. This is because an agreement to accept a proposal to pay a debt that is already due is not legally binding unless it is supported some other new terms.

To make it legally binding, you would need to either accept some form of incentive (e.g. an additional amount that your debtor pays to you in return for agreeing to accept the proposed payment arrangements), or you could both agree to sign our separate deed of variation of debt payments template, which your debtor may well prefer to do, since they don’t have to pay more money to you, on top of the funds that they are already struggling to provide.

If you both agree to these alternative payment terms, our experts recommend that you put in place that deed of variation of payment terms or even our agreement in full settlement of disputed debt as soon as possible.