Collect payment for an outstanding debt: Collection Letter
What is a Collection Letter?
Borrowing and lending money is a serious commitment; if the borrower hasn't upheld their end of the bargain, a Collection Letter might be the document for you. Collection Letters can help you address possible issues, resolve debts, and move forward.
Also referred to as a Demand Letter or Debt Collection Letter, it should account for likely complications by being detailed and thorough. Cite the principal amount, any interest or fees, and a description of what the original balance is for—including dates and locations. By clearly conveying all the relevant information, you may be able to avoid future misunderstandings or any challenges to your claim.
If the debt remains unpaid, you'll need to have solid documentation that you provided the borrower sufficient notice before you can increase collection activity. A Collection Letter is an important first step toward receiving what you're owed. Get started on yours with Rocket Lawyer now!
When to use a Collection Letter:
- You want to collect payment for an outstanding debt.
- You are considering more forceful collection measures.
Have questions about your Collection Letter?
Whether you're preparing your Collection Letter, reviewing one someone sent you, or just want to understand it better, here's how to get help.
- Understand what it says or review it. Use our AI legal assistant to ask questions about your Collection Letter, understand what it says, and spot anything that may need a closer look.
- Ask an attorney a question. Connect with an attorney for legal information, with a written answer within one business day or a live consultation.
- Get advice on what to do. For privileged, confidential advice about your specific circumstances and next steps, book a Legal Advice Session with an attorney.
Sample Collection Letter
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COLLECTION LETTER
Dear ,
This is a reminder that your account with us appears as past due. Our records indicate that you have an outstanding balance with the following invoice overdue:
| Past Due Date |
| Principal Balance |
| Description |
In addition, on , the interest began to accrue at a rate of % per annum. As of the accrued interest you owe equals .
Summary of Charges:
ACCRUED INTEREST:
TOTAL BALANCE DUE:
Please let us know the status of this payment. Please do not hesitate to call us if you have any questions about the balance on your account. If we have not heard from you from within 30 days of the date of this letter, we will initiate further action that may result in legal proceedings.
Regards,
| By: | Date: |
Collection Letter FAQs
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Why is a Collection Letter important?
Sending a collection letter is an effective way to inform a customer of a past-due amount. Of course, the goal of the letter is for you to eventually collect payment. Once you have gathered and verified all of the customer's account information, you will be able to create a comprehensive letter that reminds the customer of any late balances and, hopefully, allows you to receive payment – if they’re not acting in bad faith.
In case they still don’t pay, it also serves as documentation that you have tried a more amicable approach and provided sufficient notice before moving on to a different collection activity.
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Can I ask for a late fee in my Collection Letter?
When payments are late, yes, there may be a late charge added to the overdue balance. A late fee may be a single total or may be set up to accrue at a designated rate (for example, a daily rate). Late charges are typically determined and agreed upon in the original payment agreement.
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What kind of information is included in a Collection Letter?
Collection Letters may include details such as the creditor's name and contact information, the amount owed, the original due date, any late fees or interest charges, instructions for making payment, and consequences of non-payment.
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What are my rights when dealing with Collection Letters?
Debtors have rights under the Fair Debt Collection Practices Act (FDCPA), including the right to request validation of the debt, dispute inaccurate information, and request that the creditor cease communication. Familiarize yourself with your rights and seek legal advice if you believe your rights have been violated.
