Asking a Creditor to Forgive a Debt

Use this letter to request that a creditor forgive your debt and write it off for compassionate reasons.

Debt Help
Dealing with Creditors
Letter to Creditors Requesting That They Forgive Debt - Sample Template Letter

Sample Letter to Creditors Requesting Debt Forgiveness in Canada

Q: What is Debt Forgiveness?

The borrower can apply for debt forgiveness on compassionate grounds by writing about the financial difficulties and requesting the creditor to cancel the debt amount.

Q: How Credit Card Debt Forgiveness Works?

Credit Card debt forgiveness works when the borrower negotiates with the lender and they agree to forgive either some portion of the debt amount (partial) or the entire outstanding balance.

Q: How Should I Respond to a Debt Settlement Offer?

When you receive a legitimate debt settlement offer, you can either accept the settlement offer or make another debt waiver request – you’ve to write a letter to the creditor explaining the same.

Q: How Will Debt Settlement Affect My Credit Score?

Debt settlement will generally impact your credit score negatively – when the lender agrees to close your contract on a reduced settlement amount, they are negating the actual agreement amount, which will affect your credit score.

Q: How Long Can Debt Collectors Pursue Debt?

According to the Canadian law, debt collectors have six years to collect the debt payment, failing which they can’t sue the borrower and take any legal action against them.

Compassionate Write-Off Sample Letter to Your Creditors – Template

This is a template letter to your creditors requesting that they forgive your debt and write it off for compassionate reasons. Before using it, make sure you know how to communicate effectively with your creditors.

Caution: This sample letter doesn’t work for every situation. It’s also important when communicating with creditors to use the term “alleged debt.” Here’s why. Please read this note before using this sample letter.

[Today’s Date]

[Creditor Name]
[1 Downtown Street]
[City, Province Postal Code]

WITHOUT PREJUDICE

ATTENTION: CREDIT DEPARTMENT
RE: ACCOUNT #123456789 SMITH, JOHN

Dear [Creditor]:

My current income from [CPP, OAS, Disability Pension, Government Assistance, etc.] is not enough for me to be able to make any payments towards my alleged debt at this time. Due to my [medical condition/disability/age], I do not foresee any changes to my financial situation or employment status that would put me in a position to make payments any time in the future.

Please find attached [doctor’s letter(s), counsellor’s letter, case worker’s letter of support, description of condition and explanation how this affects your ability to work, any information you feel supports your statement of inability to pay now and in the future], as well as a copy of my [proof of income] and a monthly expense sheet.

I respectfully request that you forgive my alleged debt, as my condition precludes any employment, and my current and future income does not support any debt repayment.

Please respond to my request in writing to the address below at your earliest convenience. Thank you in advance for your understanding of my situation.

This communication is provided solely for the purposes of notifying you to communicate in writing only and does not constitute an acknowledgement of the alleged debt described above.

Sincerely,

[your name]
[complete mailing address]
[phone number]
[account number]

Last Updated on April 28, 2025

FAQ’S

What is Debt Forgiveness?

Debt forgiveness is when a creditor cancels a borrowers debt on compassionate grounds. This can come about after the borrower explains to the creditor their financial difficulties and their inability to repay the debt in the foreseeable future.

How Credit Card Debt Forgiveness Works?

Credit card debt forgiveness involves negotiating with your creditor to have a portion or the entirety of your debt canceled, typically due to financial hardship. This process often requires submitting a formal request detailing your circumstances and may necessitate supporting documentation.

How Should I Respond to a Debt Settlement Offer?

If a creditor offers you a debt settlement, it’s important to consult a non-profit credit counselor. Share the offer with them and review your financial situation together. They can help you understand the advantages and disadvantages, including the impact on your credit report, as a settled debt will be marked as written off and harm your credit for seven years. A credit counselor may also identify better alternatives, but you’ll only discover these by discussing your options with them.

How Will Debt Settlement Affect My Credit Score?

Negotiating a debt settlement on your own or through a for-profit company can significantly damage your credit for up to six years. This happens because you’re asking the creditor to accept less than the full amount you originally agreed to pay, which signals to them that the debt wasn’t fully repaid. To minimize this impact, consider working with a non-profit credit counseling organization like ours. With their assistance, the negative effect on your credit will typically last only two years.

How Long Can Debt Collectors Pursue Debt?

Debt collectors can attempt to collect a debt for the maximum time permitted in your province, known as the “Statute of Limitations.” Below are the time limits for debt collection by province:

Maximum Debt Collection Length (Statute of Limitations)	Provinces and Territories
2 Years	Alberta, BC, New Brunswick, Nova Scotia, Ontario, Saskatchewan
3 Years	Quebec
6 Years	Manitoba, Newfoundland, Northwest Territories, Nunavut, PEI, Yukon

Last Updated on April 28, 2025

Some Other Options

If you’re still scrolling, it seems the sample letter above didn’t fully meet your needs. To help, we’ve provided three additional options in the hope that one of them will be more useful. Below are two alternative sample letter templates that might better fit your situation.

Reduced Payment

For when you can only afford to make partial payments.

Get Letter

Can’t Make Payments

For when you can’t make any payments for a short period of time.

Get Letter

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One Last Option

If the previous options weren’t quite right, here’s another approach to explore what assistance may be available to you. This is a straightforward, nine-question self-assessment that presents all your potential options at the end. It assumes you have an income, but if you don’t currently have one and expect to in the future, this tool can offer insights into options that might become available down the road.

Find Out What Options May Be Available to You
by Answering 9 Simple Questions

Just answer these easy, multiple-choice questions to get a look at your potential options. Within a few minutes, you'll be looking at summarized options and results that apply specifically to your situation.

Discover Your Options

1. How would you describe your financial situation? Please move the slider along the scale to reflect approximately where you feel you're at.

I can cover all my expenses each month, plus have the ability to save.

I can cover my monthly expenses, but I need to borrow, work extra, etc.

I can no longer cover all my expenses every month.

2. Which of the following best describes you?

I pay off my balances in full each month I carry a balance but my debts are in “good standing” I carry a balance and I am behind in my regular payments I am receiving collection calls, letters, or threats to repossess assets I have been sued by one or more creditors

3. How stressed do you feel about your debt?

Not stressed

Somewhat stressed

Very stressed

4. Do you have any of the following significant assets? (Check all that apply)

Vehicle(s) Property Investments

5. Do you have any of the following secured debts? (Check all that apply)

Mortgage Vehicle Loan Line of Credit (Secured) Loan (Secured)

6. Do you have any of the following unsecured debts? (Check all that apply)

Credit Card Line of Credit (Unsecured) Payday Loan Overdraft (Unsecured) Outstanding balance with a service provider (phone/internet, utilities, gyms, etc.)

7. Do you have any of the following government debts? (Check all that apply)

Canada Revenue Agency (CRA) Debt Student Loan

8. What have you done up to this point for your debt? (Check all that apply)

I have contacted a bank or credit union for help. I have contacted a financial professional. I have discussed my situation with friends or family. I'm not sure where to start. I have done some research but need help understanding things. I don’t have any income to work with.

9. What province or territory do you live in?

Calculations - Hidden from Users

General Numbers: Income: $ People in Household: Housing Expenses: $ Food Expenses: $ Transportation: $ Medical Expenses: $ Support Payments: $ Home Value: $ Mortgage Balance: $ Other Assets: $ Government Debt Amount: $ Secured Debt Amount: $ Unsecured Debt Amount: $ Debt Payments: $ Debt Payments as % of Income: %

Debt Relief Numbers: Needs Help?: Assets can pay off consumer debt?: DMP Qualifier Redline (Debt to Income Level): % (Line at 23%) Debt Amount > Min: '' (5K+ Ideal, 3K Min) Income: $ - Survival Expenses: $ Income - Survival Expenses: $ Minimum DMP Payment: $ Can afford a DMP: Qualifies for DMP: Consumer Proposal: Debt over $5,000?: Lowest CP Payment Est.: $ Enough income for CP payments? : , $ Bkrpt Exemption Amount: $ Amount over(+)/under(-) guideline: $ Over $200 above guideline?: Qualifies for CP: Insolvency Insolvent?:

Do you have questions?

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Sample Letter to Creditors Requesting Debt Forgiveness in Canada

Compassionate Write-Off Sample Letter to Your Creditors – Template