How to best draft a debt collection letter and how to avoid it

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A debt collection letter becomes necessary when a debtor has not paid his bill within the deadline or has failed to pay an instalment.

A debt collection letter requests a debtor to pay a debt. We show you here what the debt collection letter contains and what you have to consider in this context.

Debt collection letter: Frequently asked questions

When to write a debt collection letter?

A debt collection letter becomes necessary when a debtor has not paid his bill within the deadline or has failed to pay an instalment. The creditor then sends the debtor a payment reminder in the form of a debt collection letter in which he demands payment.

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Will a debt collection letter affect my credit score?

If you receive a debt collection letter yourself, this is no cause for concern, as long as it is only a first payment reminder. If you then pay the debt quickly, this will have no effect on your credit score.

However, if you have not paid the debt even after several payment reminders and the creditor has turned to a collection agency, this will have a negative impact on your credit score.

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How to stop a debt collection letter in the UK?

If you regularly receive debt collection letters from collection agencies, you can only stop this if the debt is illegitimate, i.e. if, for example, there is no invoice to prove that a creditor has a legitimate claim against the debtor.

If the debt is legitimate, i.e. a legitimate payment is actually outstanding, a debt collection cannot be stopped, as the creditor always has the right to contact the debtor. However, one can ask him to change the communication to email instead of a letter.

How to challenge a debt collection letter?

Depending on whether the debt is legitimate or not, you can challenge a debt collection letter. If the debt is unjustified, for example because no invoice exists or it cannot be proven to which service the debt relates, you can challenge the debt collection letter.

To do this, write a letter to the collection agency or the creditor asking either for proof of what exactly the debt relates to or to stop contacting them because you know the debt is unjustified.

Debt collection letter: Sample & what it should include

In this section, we show you some samples of debt collection letters and appropriate answers to them if the letter is to be challenged or evidence is to be requested.

Debt collection letter: Template

If a debtor is in arrears for the first time, a debt collection letter is sent in the form of a payment reminder. Choose a polite tone so that the business relationship is not negatively affected:

Hi [Client's name], We haven't received payment for invoice xyz, due on xx/yy/zzzz, with an overdue payment of £100.00. We kindly ask you to check your accounts, and if payment has not been made yet, to do so until xx/yy/zzzz. In case you haven't received the invoice, please find it attached. Kind regards, [Your name]

If the debtor has not responded to a payment reminder several times and payment is still outstanding, write a final letter of debt collection:

Hi [Client's name], We contacted you on [Date when 1st or 2nd reminder was sent] regarding the overdue invoice xyz. We have still not received payment yet. We ask you to pay within 7 business days, or we will have the amount collected by a collection agency at your cost. Kind regards, [Your name]

How to respond to a debt collection letter?

If you receive a debt collection letter, you must first check whether the debt is justified or not. If you are sure that you are not responsible for the debt, you can write the following:

Dear [name of debt collector or contact at collection agency], you contacted me by letter stating the debt as [reference to debt collection letter]. I am not responsible for the debt. If you believe I am responsible for this debt, send me an email containing all the relevant documents related to this debt. Stop contacting me by letter and only contact me by email: [your email address]. If you stop collecting this debt and report this to another company or credit bureau, indicate to them the debt is disputed. Sincerely, [Your name]

How to write a letter requesting proof of debt?

If you are not sure whether a debt is justified or not, you should ask the creditor or the collection agency for proof. This can be formulated like this:

Dear [name of debt collector or contact at collection agency], you contacted me by letter stating the debt as [reference to debt collection letter]. I kindly ask you to provide the information below so that I can identify this debt clearly: [include all of the following points that apply to your situation] Name and address of the creditor, their account number and the amount owed Proof there is a valid basis requiring me to pay this debt If this is someone else's debt, identify this person and provide information why this is now my debt to pay A copy of the last billing statement/invoice showing the amount owed Debt amount and date, when it was obtained Please consider this debt disputed until you provide all of the information above. If you stop collecting this debt and report this to another company or credit bureau, indicate to them the debt is disputed. In addition, state in any report that you have failed to provide evidence that this is my debt. Sincerely, [Your name]

Debt collection letter of demand & its meaning for businesses

Writing a debt collection letter is not a pleasant task, but it is part of everyday life for many companies. The sooner you react to a customer's or business partner's payment arrears, the better. On the one hand, this prevents the debt from being forgotten and, on the other hand, it avoids putting too much strain on the company's liquidity.

The longer a company has to wait for a payment, the less liquidity it has during this period. In the worst case, this can even lead to a cash shortage if the outstanding payments are high. We therefore recommend that you write a debt collection letter as soon as a payment is overdue.


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