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Writing Good Debt Collection Letters

Aug 17, 2007
One of the reasons why a debt goes beyond recovery stage is failure on the part of the creditor to contact the debtor periodically and demand repayment of the debt. It may be due to failure to communicate or improper communication. This article gives some tips on how to write good debt recovery letters.

The first notice to a debtor regarding an overdue debt should not appear to be a debt recovery letter. It should be written in a friendly fashion, just a gentle reminder, without offending the reader. It is possible that the debtor had failed to keep up the commitment due to sheer oversight after all. If no reply is received for the first letter, the second should follow a week later mentioning the details of the overdue amount and requesting payment. You may gently ask if the client is facing any problem for making the payment.

The third letter in the third week should be more persuasive and it should quote any written agreement like an invoice and explain how the delay in payment is affecting your business and your cash flow. If no reply is received even after the lapse of a week, the fourth reminder should state plainly that it would be the last letter with a deadline of a week before the matter is handed over to recovery agents. You may attach a copy of the invoice or any other written proof.

Finally after the lapse of 4 weeks, if there is no response, you may refer the matter to a debt recovery agent after ensuring that the contact address of the debtor is correct. Letters should preferably be followed by telephone calls directly to the person concerned, if possible. You may also take the help of outside agencies for writing debt recovery letters if you don't have the time to do it.

You should not fail to contact the debtor on the first instance of the debt falling overdue. More the elapse of time, lesser is the chance of recovering the debt. The reminders should be sent once a week. Email reminders are not treated in the same way as those sent on paper by some people. Emails may fail to get noticed if there are too many of them, occasionally they may fail to reach the addressee. Hence if there is no response to repeated email reminders, they should be followed by paper reminders. Digitally signed emails have better legal sanctity then ones without signature and they can be retained as evidence in case of dispute later.
About the Author
Tristan Andrews writes useful articles about collection agencies. Discover and explore the world of debt collections. Find out how using a collection agency can expand your financial horizons at http://www.advinfoc.com
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