Mortgage LOX Maker: Debt Settlement Letter
Make your own Letter of Explanation (LOX) for debt settlements. Explain settled accounts on your credit report for mortgage applications. Generate instant PDFs for your lender with digital signature capture.
Your Information
Letter Preview
I, {{borrowerName}}, confirm that my {{debtType}} with {{creditorName}} was settled in full for ${{settlementAmount}} on {{settlementDate}} under a settlement agreement.
The account is resolved, and I have no further obligations to {{creditorName}}.
Settlement documentation and proof of payment are attached.
{{borrowerName}}
{{borrowerEmail}}
{{borrowerPhone}}
Borrower's Signature: {{signature:borrowerSignature}}
Date: {{signatureDate}}
Tips for Success
- Keep explanations brief and factual
- Attach supporting documentation when possible
- Review all information before signing
- Submit within 48 hours of your loan officer's request
Important Reminders
- All information must be truthful and accurate
- False statements may result in loan denial
- Keep copies for your records
- Contact your loan officer with questions
When To Use A Debt Settlement Letter
Credit Card Settlement
You settled credit card debt for less than the full amount owed due to financial hardship.
Medical Debt Settlement
You negotiated a settlement for medical bills that were overwhelming your budget.
Personal Loan Settlement
You settled a personal loan or line of credit that you couldn't fully repay.
Collection Account Settlement
You negotiated a settlement with a collection agency for an old debt.
Business Debt Settlement
You settled business-related debt after a business closure or financial difficulties.
Common Scenarios Requiring Multiple Letters
Debt Settlement + Credit Recovery:
- Use this debt settlement letter to explain settled debts
- Use our derogatory credit letter to address remaining credit issues
- Use our source of funds letter to show current financial stability
How to Use This Debt Settlement Letter Generator
Gather Your Information
Collect all necessary details and supporting documentation before starting the generator.
Complete the Form
Fill out all required fields in the generator. The preview will update in real-time as you type.
Review and Sign
Review your letter for accuracy, add your digital signature, and download the PDF.
Submit to Your Lender
Send the completed letter to your loan officer along with any supporting documentation.
Supporting Documents Your Lender May Need
| Document | What It Tells Your Lender |
|---|---|
| Settlement agreement from creditor | Provides additional verification and context for your situation |
| Payment receipts or bank transfers | Provides additional verification and context for your situation |
| Creditor confirmation letter | Provides additional verification and context for your situation |
| Account closure documentation | Provides additional verification and context for your situation |
| Credit report showing settled status | Provides additional verification and context for your situation |
Frequently Asked Questions
When will I need a debt settlement letter?
Your loan officer will request a debt settlement letter if settled accounts appear on your credit report.
How do debt settlements affect mortgage approval?
Debt settlements may lower your credit score but improve your debt-to-income ratio by eliminating monthly payments.
How long do debt settlements stay on credit reports?
Debt settlements remain on credit reports for 7 years from the settlement date.
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