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Debt Settlement Offer Letter

Debt Settlement Offer Letter Template for Germany

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Key Requirements PROMPT example:

Debt Settlement Offer Letter

"I need a Debt Settlement Offer Letter for our bank to propose settling three outstanding corporate loans totaling €2.5M with Company XYZ GmbH for 75% of the total amount, with payment to be made in two installments by March 2025."

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Document background
The Debt Settlement Offer Letter is a crucial document in German debt resolution processes, used when a creditor is willing to accept a reduced payment to settle an outstanding debt obligation. This document is particularly relevant in situations where full debt recovery may be challenging or when avoiding formal insolvency proceedings is preferred. The letter must comply with German civil law requirements (BGB) and may be used by financial institutions, debt collection agencies, or legal representatives. It typically includes detailed information about the original debt, the proposed settlement amount, payment terms, and the deadline for acceptance. The document serves as a formal written record of the settlement offer and, when accepted, becomes a legally binding agreement under German law.
Suggested Sections

1. Sender and Recipient Details: Full legal names and addresses of both parties, including any reference numbers

2. Date: Current date of the letter

3. Subject Line: Clear identification of the letter's purpose and any relevant account/debt reference numbers

4. Debt Acknowledgment: Statement of the current outstanding debt amount and its origin

5. Settlement Offer: Clear statement of the proposed settlement amount and percentage of original debt

6. Payment Terms: Specific details about how and when the settlement amount should be paid

7. Deadline for Acceptance: Clear statement of how long the offer remains valid

8. Settlement Effects: Description of what happens when the settlement is completed (e.g., full discharge of debt)

9. Signature Block: Space for signature, name, and title of the sender

Optional Sections

1. Multiple Debt Details: Used when the settlement covers multiple debts or accounts

2. Collateral Release Terms: Required when the original debt involves collateral that needs to be released

3. Tax Implications Notice: Warning about potential tax consequences of debt forgiveness

4. Confidentiality Clause: When the terms of the settlement should remain confidential

5. Default Provisions: Used when offering installment payments, describing consequences of default

6. Third-Party Authorization: When the letter is sent by a debt settlement company or legal representative

Suggested Schedules

1. Debt Calculation Schedule: Detailed breakdown of the original debt, interest, fees, and proposed settlement amount

2. Payment Schedule: If installment payments are allowed, detailed schedule of payment dates and amounts

3. Account Statement: Current account statement showing debt balance and transaction history

4. Settlement Payment Instructions: Detailed banking or payment information for submitting the settlement amount

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant Industries

Banking and Financial Services

Debt Collection and Recovery

Legal Services

Credit Management

Consumer Finance

Corporate Finance

Insolvency Services

Financial Advisory Services

Retail Banking

Commercial Banking

Relevant Teams

Legal

Finance

Credit Management

Collections and Recovery

Risk Management

Compliance

Operations

Account Management

Corporate Banking

Debt Advisory

Relevant Roles

Credit Manager

Debt Collection Officer

Legal Counsel

Financial Controller

Recovery Specialist

Insolvency Practitioner

Account Manager

Risk Manager

Collections Director

Settlement Officer

Banking Operations Manager

Compliance Officer

Credit Risk Analyst

Chief Financial Officer

Legal Operations Manager

Industries
Bürgerliches Gesetzbuch (BGB) - German Civil Code: Primary legislation governing contractual relationships, debt obligations, and settlement agreements (particularly §§ 779-782 BGB regarding settlement agreements, and §§ 362-371 BGB regarding debt discharge)
Insolvenzordnung (InsO) - German Insolvency Code: Regulates insolvency proceedings and out-of-court settlements, particularly relevant for understanding the legal framework of debt settlements as alternatives to bankruptcy
Verbraucherkreditgesetz (VerbrKrG) - Consumer Credit Act: Provides specific protections for consumer debtors in credit relationships and debt settlements
Kreditwesengesetz (KWG) - Banking Act: Relevant when dealing with debt settlements involving banking institutions, particularly regarding regulatory requirements for debt restructuring
Schuldverschreibungsgesetz (SchVG) - German Debt Securities Act: Applicable when dealing with debt securities or bonds, providing framework for modification of debt terms
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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