How To Compose An Awesome Debt Collection Letter

debt collection letter
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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.

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: You must ensure these are correct on your debt letter template.

  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.

Debt Letter Template

You will find various debt letter templates all over the web and as a rule most of them are not very good. Write your own or have a debt collection attorney write a letter for you. You can then use this as a template for future debt collection needs arise.

You can use our frequently asked questions to consider additions to your demand letter. Let your detor know what to expect without out and out threatening language.

Debt Collection Letter FAQ

  • Can I Send A Letter Anonymously

    Absolutely not. That sounds like you might be in the wrong or blackmailing. You have to use your details and make it as easy as possible for the recipient to reply.

  • Am I Oblidged To Send A Reminder Letter

    Not really, unless it is stipulated in your contract. However, as a 1st step in the debt collection process it is essential that you have something that you can refer to.

  • Where Do I Send Letter If Debtor Has Absconded

    Send the reminder or defauly letter to the last know address. It might be forwarded to the debtor. If you know for a fact they have left the address do not waste postage or paper in sending multiple letters. You can use a debt collection agent to locate your debtor and complete a financial check on them. And simply stop sending the letters.

  • Does The Remider Letter Have To Be Sent By A Lawyer

    You 1st letter to the debtor should be sent by yourself. This keeps the negotiation process open, quick and cheap. Try not to involve debt lawyers at this stage.

  • When Should I Send The Debt Reminder Letter

    From years of experience we suggest you send the default letter as soon after the payment date as possible. Remember if you allow the debtor to pay via a bank there might be additional clearing time for checks. You might want to wait 3-5 working days. If it is by direct debit, send the reminder as soon as the debit is returned.
    Nothwithstanding these suggestions, you can send the reminder letter the day after the payment was due and not made. in the afternoon to ensure all paymenst by post are accounted for.

  • Can I Write Anything On The Outside Of The Envelope

    The days of writing final demand or overdue payment on the outside of a letter are long gone. Do not do it; maintain the moral high ground. You should never embarrass or intimidate your debtor. You can of course add your name and address so that the debtor might be convinced to open your letter.

  • Can I Send Reminder By Email or SMS

    Yes, assuming you have specifically stated this in your agreement. You can do this if you are collecting your own debt. Do not be impressed by lawyers or debt coolection agents who only use this method becuase it is cheap.

  • What Is The Best Method To Deliver A Debt Collection Letter

    The absolute best method is to have the letter delivered, is to place in the debtors hand. This gives the default letter real urgency and legitimacy. The person delivering the letter will be able to report back to you the situation the debtor is in. Mainly attitude and living style.

  • How Do I Deliver A Demand Letter In A Foreign Country

    Although you have the likes of DHL and FedEx, we would suggest a 2 step approach. Firstly an email. Should that fail you need a professional. Locate an international debt collection company near where you think your debtor is. Have them deliver it for you.

Sample Of Debt Collection Letter

You are not going to find a sample letter that you can simply plug in your details. The reason for this, is that you have to understand what you are writing and therefore have to write it yourself. Sample debt letters refer to all sorts of things that are legal sounding, but mean nothing to you nor your debtor.

Filling these sample templates takes longer than making your own debt collection letter. We know – we have tried. If you want a legal letter, get the services of a debt collection lawyer.

If you can read this, then you can make your own debt collection letter. It does not need to be a literary masterpiece. Even if it has to go to court.

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. If you, wish you can send your debt letter sample to us to review free of charge.

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.

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 without delay.

Debt Letter Template

There are literally hundredes if not thousands of site offering templates to make it “easier” to compose a definitive reminder letter. I have yet to find one that was eaiser than writing my own. They all appear to be tempting you to use a solicitor.

If you cannot write your own letter – use a solicitor. However, they then have you on their hook.

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

Please share your ideas. Your experiences will help us all! If you have a debt letter example we can share so that we can help other creditors. Especially those chasing personal debts.

Creditors and the Debt Collection Letter

The following is from a debt collection agency in the USA. It might repeat some of what we said. However it is always good to have our thoughts bolstered by debt recovery agent. It describes how debt collection is a 2 way street.

You may think that the debt collection letter that’s sitting in your mailbox is nothing but pain mailed directly to you. However, you have to keep in mind that for every debt collection letter that is sent, the pain goes both ways – the creditor is desperate for payment for an overdue account and the debtor is scrambling for money to meet the due date of the payment. So, just as much as the debtor feels pressure, so does the creditor. After all, every delinquent account means that the company will not be getting back some money.

So, what exactly does a debt collection letter contain? The debt collection letter is sometimes referred to as a letter of demand. This letter notifies the debtor of the outstanding balances or unpaid amounts on his account. In certain cases, the letter may also inform the debtor that unless he is able to make the payments on time, court action may be used against him.

In order to help the creditor grasp the full details of the debt, the debt collection letter must come with all the documents that are related to the account. These include copies of the contracts, invoices of past payments, and other letters of agreements made between the debtor and creditor. This way, the debtor will have the documentation that proves that he is responsible for the debt.

The debt collection letter lets the debtor know that the creditor is serious about getting his money back. And in the event that the matter goes to court, the creditor can use the letter as proof that the company did attempt to contact the debtor in an effort to settle the account.

Now that the debt collection letter has reached your mailbox, what do you do next? The first step is always to respond to the letter. You have to let the creditor know that you are not running away from your responsibilities. If you ignore the letter, you may put yourself in more trouble.

Before you respond, study the letter and the attached documents. If you need to dispute the debt, contact a lawyer who can help you. Once you and your lawyer have drafted a letter of dispute, mail it to the creditor immediately. If you agree that you do owe the debt, you should contact the creditor as well.

Once you have contacted your creditor and your responsibility for the debt has been duly established, you may begin to negotiate with the creditor. You can offer to pay several installments or you may offer to pay immediately but with a lesser amount. Since the creditor most likely wants to save on the costs of pursuing you for payment, he is bound to agree.

After you respond, the debt collection letter has done its job. It has opened a way for the creditor to reach you and inform you of your delinquencies. At the same time, the letter has made some options available to you, and you can select a payment scheme that is affordable to you.

Dealing with Debt Collection Letters

We have to thank those interested in fair debt practices in debt collection for this additional information.

If you have missed payments for any of your debts, there is a chance that you will have debt collection letters piling up on your desk. These letters will remind you of all the money you owe to certain people or certain companies. However, before you shove those debt collection letters into your desk drawer, try looking at them. Once you start acknowledging these letters, you’ll have less anxiety over your unpaid bills.

Get all your debt collection letters out. Try organizing them. Sort the letters according to the companies that sent them. After that, sort them according to the dates they were sent. Organizing the debt collection letters will help you track the status of your account.

If you’re getting confused, here’s a quick guide to help you understand the different types of debt collection letters you will receive.

Initial Collection Letter

– This letter is the first letter you will receive. It simply notifies you that you have missed a payment. It contains information about the amount you owe as well as the due date. It may also include information about penalties for late payments.

Follow-up Collection Letters

– These letters may form the bulk of your pile of debt collection letters. They carry no threats. They simply tell you things like the amount you owe, how long the payment has been overdue, and how you can settle the account immediately. These letters also state that the creditor is still willing to conduct business with you, and he still values you as a good customer. Since these letters are to notify you about your outstanding debt, your creditor will send a lot of them to you.

Final Demand Collection Letter

– This letter is the last letter you will receive. If you do not respond to this letter, expect a debt collector to contact you. Out of all the debt collection letters, this one is the most serious and imposing. It usually gives a deadline for you to make payment of the amount due. This letter also informs the debtor that if he does not make any response, the account will be turned over to a collection agency.

Debt collection letters help the debtor understand one thing – the creditor wants his money back. So, before you get into further trouble, grab the debt collection letters and contact your creditor immediately. However, try to initiate communication through writing. This ensures that you will have actual documents to use as evidence in case there is any disagreement between you and your credit in the future.

Once you have responded to a debt collection letter, just wait for offers from the creditor. Usually, debt collection letters are a sign that the creditor is frustrated. He is eager to get his money back. In order to make sure that you keep paying, the creditor will negotiate with you. He may lower the fees, give you more time or reduce the interests on your debt. For the creditor, it is better to receive a smaller amount than nothing at all.

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