Debt Settlement Offer Letter Template for Saudi Arabia

The Debt Settlement Offer Letter is a crucial document used in Saudi Arabian business and financial transactions when a creditor proposes to settle an outstanding debt for less than the full amount owed. This document is particularly important in the Saudi Arabian context where financial transactions must comply with both commercial regulations and Shariah law principles. The letter typically arises in situations where full debt recovery may be challenging or when expedited settlement is preferred. It includes essential details such as the original debt amount, current outstanding balance, proposed settlement amount, payment terms, and acceptance deadline. The document must be carefully drafted to ensure compliance with Saudi Arabian legal requirements, including the Enforcement Law and SAMA regulations, while adhering to Islamic financial principles that prohibit interest (riba). Its effectiveness depends on clear articulation of terms and conditions, proper authorization, and compliance with local legal and religious requirements.

1. Letter Header and Date: Formal business letter header including sender's details, recipient's details, and date

2. Reference Information: Account numbers, loan references, or other relevant identification numbers

3. Original Debt Acknowledgment: Clear statement of the original debt amount and its origin

4. Current Outstanding Amount: Statement of the current total amount owed

5. Settlement Offer Details: Specific proposed settlement amount and terms of the offer

6. Payment Terms: Method and timeline for payment of the settlement amount

7. Settlement Conditions: Any conditions that must be met for the settlement to be valid

8. Offer Validity Period: Timeframe for which the settlement offer remains valid

9. Legal Effect: Statement of the legal effect of accepting the settlement offer

10. Closing and Signature: Formal closing, signature block, and contact information