A Debt Forgiveness Letter is a formal document that informs the recipient they no longer have to pay the sum of money owed to the letter writer. Alternate Name: Forgiveness of Debt Letter. Whether you represent a financial institution that decided to make life easier for their client, you want to relieve a debtor of their financial liability due to extenuating circumstances, or you are prepared to meet the other parent of your child halfway and forgive their debt, use the appropriate template to notify the other party they do not owe you any money anymore.