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Letter Proposing to Installment Payment- what to keep in mind?

Letter Proposing Payment

Letter proposing payment in installments is like an offer made by the debtor to pay off the outstanding debt by a regular fixed amount over a period of time. Today in this article we will cover the complete parameter of the topic.

What is the meaning of Letter Proposing Payments in Installments?

Letter proposing payments means that if you are not able to make the immediate payments of a whole debt then this letter proposing installment helps to make sure to detail the offer to pay off the debt by regularly fixed installment. With that, this letter proposing installment tries to stop the creditors from taking further action against you.

Letter proposing installments thoroughly outline the core details of the proposal that includes the due to be paid in the installments so that creditors are confident in your ability to repay the debt.

Let’s us understand with an example-

When a dealer comes into an assignment with a large number of goods with a buyer, then the buyer usually goes with an option of paying payments in parts. This is not always the case but hypothetically and considering the number of consignments is large and needs lots of work by the dealer to manufacture the product in bulk. So, in this case, the buyer and dealer may choose to come into letter proposing payment in installment.

How does it work?

Letter proposing installment payments works in-

  • When you or your organization are confident that you owe someone some amount of money
  • When the payments of the whole debt cannot immediately be made
  • When you don’t want the creditors to take further action against you

Therefore, it covers the offer to pay off a debt by regular installments.

What is the significance of Letter Proposing Payment?

If you accept that the money you owe to an individual or company, but you are currently out of financial resource to pay off that money the outstanding debt immediately then you would like to offer to pay the due in installment and in that case letter proposing payment in installments comes into the picture. The Letter will show the good intention and willingness to pay off the debt.

This also helps in stopping the creditor to take any action against you. The letter also helps you with your cash flow especially when your hands are into the business.

A sample of Letter Proposing Payment in Installment

The below-shown Letter proposing installment sample is just a like an example it doesn’t have the complete formal draft of the letter. As the matter is of great concern do not take any risk in the matter. We at enterslice have the professional team for doing such an important task for you. For any help or query contact us.

Registered address,

City with ZIP Code

Phone: ********

Fax no.: ********


The Manager
Company Name
Registered address
The city with Zip code
Phone- ******
Fax- *****

Dear Sir,

Due to prolonged depression in our trade, we have not been able to realize a larger number of our outstanding accounts and as we know that we have failed to clear your outstanding account against us. We extremely apologize for it and wish you to understand that the things turned like this for reasons beyond our control.  We are now trying our best to collect the due and also to dispose our stock even at a normal profit, in order to secure ready cash.

Although we do not expect to collect within a short time the sufficient funds that enable us to pay off the debt by a single remittance. We, therefore, propose to send you a cheque of INR ***** fortnightly. The arrangements we hope will be considered and accepted by you as well as shall be in a position to clear the account of balance within prescribed months.

Expecting to hear a positive response from your side.

Your Faithfully,
Company’s name

What does it Include?

The documents include-

  • Basic details of dealer like name, address, phone number, account number
  • Basic details of a buyer like a name, address, phone number, and account number
  • Request date
  • Details of the request like when you are proposing to pay or get paid in parts of every month
  • The actual purpose of the request like it is advisable or to be honest about the situation
  • The letter should also have communication of whether the buyer suggest any other options
  • The letter should also address the future plan of action and the agenda

Is the letter works as a Formal Legal Agreement?

It is like a letter proposing a payment in installments. Furthermore, it is an offer and doesn’t constitute as a legal agreement until it is drafted by any professional and stamped. You can use it as a legal agreement if both the parties would like to.  In addition to this, if the creditor accepts the offer through a formal letter accepting payments in installment then the agreement takes the shape of a formal legal agreement.

With mutual agreement, you can choose to make the payment either weekly or monthly depending upon the financial situation.

Some frequently asked question-

  1. Can I ask the creditor to freeze interest?

Yes, you can request the creditor to freeze any amount of interest; however, the creditor does not oblige to accept the request. This request completely depends on your relationship with the creditor and the strength of your bargaining.

  1. Can I request to consider my good credit history?

Yes, you can choose to request the creditor to have a look at your good credit history. This will help the creditor to have faith on you or of your ability to meet the repayments on time and give a stronger position for proposing payments in installments.

  1. What if my letter proposing payments gets rejected?

So, in that case, you should consider negotiating with the creditor. It is not always possible that the creditor will be satisfied with all your terms of the proposal.

  1. What if I m failed to pay the installments on time?

Calm down! If you think you are struggling to pay off the debtor cannot make it to installment plan then you should consider taking help from various government plan made for those who are struggling with debts and finance. Choose one! Contact us to know further about it.

  1. What are the related documents in Letter proposing payments in the installation?

The following documents are the related documents that are required –

  • Letter proposing payments in installments
  • Second debt recover letter
  • Letter before action
  • Promissory note
  • Debt recovery letter
  • Loan agreement


We have tried to guide you completely on Letter proposing payment on installment in case of any debt. Hope you like it. To know more about it contacts us Enterslice.

Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

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