How to Create a Debt Collection Letter

There are many reasons why debt-collection letters are necessary. They remind the debtor of his obligations and provide proof of communication to the court should litigation become a necessity. In addition, federal law insists that a standard letter be used to initiate communication. Because of that legal significance, there are guidelines you should follow when preparing a debt memo letter.

Instructions

1. Include the typical heading for memorandum correspondence:

   To:
   From:
   Re:
   Date:

2. Determine if this letter is an "initial letter" or a subsequent letter. All initial letters must contain a 30-day, federally required verification notice and should include the phrase: "This is an attempt to collect a debt. Any information obtained will be used for that purpose." All subsequent letters should include the phrase: "This communication is from a debt collector." Office hours, phone number and street address should be included in all correspondence. If the client is expected to send her payment to a P.O, box, that information should be included as well; regardless, the street address of the office should be listed.

3. Write the body of the letter. References regarding legal action should not be made unless the client has authorized legal action against the client. In an initial letter, phrases such as "pay now" should not be used either, as this tends to take away from the importance of the 30-day verification period mandated by federal law.

4. Ensure that the content of the letter is truthful. Threats and statements that are not an accurate reflection of reality should be avoided.

5. Check local laws regarding what type of information can and cannot be contained in a debt-collection letter. While the federal government sets up guidelines regarding the practice of collecting bad debts, state laws may vary.