Debt Collection Letter – How To Deal With Your Creditors

If you're handling your own first party collections

, one of the most important things you need to know is how to write a great debt collection letter. Following are the steps to putting together a debt collection letter that will get results like a collection agency would get.

Sometimes the client is just forgetting to pay or is intentionally holding on to the money for as long as they feel they can get away with it. For this reason the first collection letter you send should be phrased as a polite reminder. A copy of your invoice or a past-due notice won't suffice, because most people feel free to ignore these. A personal letter to the debtor is preferable because it motivates him or her to take action.

If the letter is worded as a reminder it gives the client a chance to maintain their self-image, but be businesslike and include the date of the first invoice, the amount and when the first payment was due. This information needs to be correct or you can risk having disputes later on if things get more difficult.

As time goes on, your letters should become increasingly more forceful. The next debt collection letter should be straightforward, as in "X amount is due; please remit upon receipt of this message." Debt collection agencies do this all the time, with two letters in each category spaced approximately every 3 weeks.

The debtor should be made aware of all possible penalties, including mounting late charges, a refusal to ship any more product until the invoice is paid, or reporting the debt to the credit bureaus, which will adversely affect the debtor's credit report.

Reference the dates of your previous letters at all times, and make a plea for the debtor to call in so you can discuss settlements or options for payment over time. Note the time, date and substance of any phone conversations between you too for future reference should the situation require a lawsuit.

The next debt collection letter and its follow-ups should be worded unequivocally. Add late fees to the original amount and make sure they realize you will contact an attorney to file a lawsuit if payment isn't remitted within 30 days. Time the last letter to arrive a month before you hit the six months late mark, because the success rate of collections at that milestone drops sharply.

A debt collection letter that is professional in appearance can be the best way to collect money on bad debt. Instead of wimping out by sending copies of invoices or procrastinating because you don't like the idea of debt collection, act like a professional collection agency and your return on the debt will be impressive. Staggering the letters with increasingly forceful language is how collection agencies handle debt collection letters, and if you do the same your results will be as professional as theirs.

Debt Collection Letter How To Deal With Your Creditors

By: Crosby Bartholomew

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