How to Collect Outstanding Debt

Outstanding debt can be collected by a collection agency or attorney.
Outstanding debt can be collected by a collection agency or attorney. (Image: call center operator image by Adam Borkowski from

According to the Credit Research Bureau, once a debt goes unpaid for more than 60 days, the chances of successful recovery falls to 50 percent. As an outstanding debt ages, the creditor's likelihood of recovering any or all of the amount owed falls.

To collect an outstanding debt, send a reminder, followed by a phone call, demand letter and finally, the hiring of a collection agency or an attorney.

Things You'll Need

  • Reminder letter
  • Letter of demand
  • Collection agency or attorney

Send a reminder letter. Once the outstanding debt has gone 30 days past due, send a professionally worded payment reminder letter to the debtor. The letter ought to address the debtor professionally and include simple language, along with payment methods. For example:

After a review of our records, we have found your account is past due. This notice is a reminder your payment is due. Payment can be made via (insert methods). If you have already sent your payment, please accept our thanks and disregard this notice.

Phone the debtor. After sending a reminder notice, allow 5 to 10 business days for payment, then phone the debtor. Inquire if they have received the reminder notice and ask if they are able to make a payment. Remind them of their obligation and politely inform the debtor that interest and/or penalties (if applicable) will be incurred if payment is not received.

Send a letter of demand. Sixty days after the outstanding debt goes unpaid, send a letter of demand to the account holder using USPS Certified Mail. The letter of demand should be straightforward and reiterate your phone conversation. State that the outstanding debt is still owed and is incurring penalties and interest (if applicable), and that the account will be turned over to a collection agency or attorney if not paid by a specific date.

Hire an attorney or a debt collection company. A collection agency may "buy” the debt from you and attempt to collect from the debtor on their own. It may also charge a percentage of the money recovered from the debtor and/or a nominal fee on the amount of the debt. Another option is to retain an attorney. If the debtor is unwilling to pay the outstanding debt, an attorney can file a civil lawsuit against him.

Tips & Warnings

  • Give the debtor options. Allow him to pay the outstanding debt using regular payments over a period of time.
  • Familiarize yourself with the FDCPA (Fair Debt Collection Practices Act). Violations can result in a lawsuit filed against you by the debtor (See Resources 1).

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