Debt Collection Letter

Debt Collection Letter.

Making your debt collection letter appropriate for purpose – 1st time, is essential. It is from this letter that all future relationships with the debtor will be built on. Most people will have never sent a demand letter to a debtor and will probably get it wrong.

However, with a little advice and direction you will create a professional and meaningful image of yourself.

We do not offer or sell debt collection letter templates.

debt collection letter

3 Basic principles of a debt collection letter

  1. Never, ever promise or threaten to do something that is either illegal, impossible, or impracticable.
  2. Always follow up on what you have said you will do in your debt collection letter.
  3. Stay calm and focused. Remain on the moral high ground at all times.

Facts On Your Demand Letter

It is absolutely imperative that you get the facts right:

  1. Who the debtor is? Could be Jnr or Snr. Mrs., or Miss.
  2. What the debt is? Include any charges that are mentioned in the contract if you have one.
  3. Who you are? If you have moved address, ensure you use both addresses. Or you could be acting on someone’s behalf.
  4. If there is a contract, state what section has been broken. Do not simply refer to the terms of the agreement. Write the terms into the body of the debt collection letter. Eg:
    1. I refer to section 2 of our agreement which states that you will pay me in full on the [date] which you did not do.
    2. On the [date] we agreed that you would [do a certain task] on the [date] which you have not done.

Make it Easy For The Debtor To Pay

Many years ago, the way to receive a payment was either in cash or a cheque. There are now a bucketful of ways that a debtor can pay you. It is imperative that you make it easy to accept payment. Wire transfer, PayPal, cryptocurrency, cash, Western Union, cheque, to name a few. In your debt collection letter make it abundantly clear that you will accept most types of payment.

By cash, we do not mean them handing you cash. They can deposit the cash into your bank account.

Cost and Risk Calculation

Writing a demand letter or a reminder letter has many costs involved. And a calculation of risk. So, how much will it cost to collect the debt versus the chance of a timely result. The cost to you includes your time, repayment time, outgoing expenses, and stress. Once you have written down these items and weighed them up, then you can decide to:

  1. Continue. Use a diary
  2. Outsource. Search the internet for a debt collection agency
  3. Write off to a bad experience. You might be able to obtain a tax deduction for this.
  4. Consider Resolute Collections.

Never throw good money after bad, unless you want to teach the debtor a lesson. Chasing after bad money will undoubtedly teach you a lesson. Can your debtor ever pay?

Stages in A Debt Collection Letter

You should have the ability to increase the pressure at each incremental stage. Do not go in with all guns blazing. If you do, you have nothing to fall back on.

Reminder, 2nd Reminder or Final Demand Letter

It makes for a great road map to send 3 letters unless you are already at the stage of a final demand letter. Each reminder in the process informs the debtor that you are good to your word. In the initial reminder you can give them a specified time to resolve the issue. If they fail to satisfy the debt in the time span given you immediately send the 2nd reminder. If that fails, you reveal your final demand and what actions might be appropriate. This gives you time to consider what “next stage” action could be.

This advice stands good for commercial debt collection and international debt collections .

Language Appropriate

Try to keep the letter language simple, so that the debtor will understand its content and purpose. Ensure that the content of the debt collection letter is in their native language and yours. This may mean you have to have your debt letter translated. Do not machine translate, have a real person translate the letter. Fiverr.com and many other can do this for you.

Debt Collection letter Promises

Never stop any action on a promise. If your debt collection letter has prompted action, NEVER stop your planned stages. You stop action when you are paid.

Additionally, never negotiate on the broken promise – you immediately go back to the demand you made in the final debt collection letter. A broken promise means a new negotiation.

Our experience has taught us that you all too often end up discussing the broken promise. The initial demand is often forgotten. The broken promise is dead in the water. Leave it there.

Concise

If at all possible, ensure that you can convey your demand on the debt collection letter to 1 page. It makes it easier to read, nor can the debtor say that they have lost a page. If your demand letter has be 2 or more pages through necessity, ensure they are numbered, bind them together with staples and tape. 

Where To Send Your Debt Collection Letter?

This sounds obvious – send it to the home address. However, you might wish to send it to an adds that you know the debtor uses frequently. Ensure that it is marked private and confidential, to be opened by address only. [debtor name] c/o [golf club] etc.

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How To Send Your Demand Letter

Always send by recorded delivery and email – both if possible. This gives you legitimacy. They cannot say that they never got your demand letter. You may want to consider hand delivering the letter and have this filmed on a phone.

Reread and Reread Your Debt Collection Letter

It is essential that you or someone else rereads any letter before it is sent so that it is perfect. Grammar or spelling errors are jumped upon by debtors. Online companies like fiverr.com have copy writers who will review and edit your debt collection letter. Becuase, it is better to pay a small fee than be ignored.

What if Your Debt Collection Letter Strategy Does Not Work?

Re-evaluate if it is worth pursuing. Focusing on other aspects of life and business could be more worthwhile and profitable. Throwing good money after bad will does not work, even with the best debt collection letter in the world


If you have no luck with your final demand letter, what should you do?

You can use one of our solutions. Resolute collections has 3 options you can choose from. You might as well start today with delay.

Do you have any suggestions that make for a great debt collection letter

Please share your ideas. Your experiences will help us all!

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