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Debt collection letter template

Adebt collection letter template is generally known as “letter of demand”. It demands the subject of debt to settle the outstanding bill, which is in default, within the certain time specified, and informs him about the total debt amount. Such letters are sent from a recovery agency on behalf of a creditor to the subjects of debt. Depending on the letter (general reminder/court action informative letter), it can either threaten legal proceedings or inform the second party (debtor) that such actions have already come into operation.

Debt collection letter template- functions and samples

A debt collection letter template has two functions: it informs the debtor of the defaulted payment and warns him about eventual legal court actions. It is always sent by post or fax (in order the receipt to be confirmed in writing by the second party), so the letter can be used as an evidence that the debtor has been contacted and warned of the bad debt situation and the following procedures. 

A debt collection letter template is used by debt collection agencies in the following forms:

1. General reminder letter, also known as a “soft letter template”: an initial reminder and an optional follow up reminder; both including the full amount of the invoice. It emphasises on settling the default payment but usually without a specific date, as it is the first reminder. The number of primary reminders depends on the debt collection agency, but usually they vary between one and three. The sample is as following:


Dear XX (name of debtor),

Regarding the amount due XX (full debt amount), we act on behalf of XX (creditor’s name and company) in order to collect the outstanding account value of your debt.

We would like to remind you that the amount above was due for payment on XX (date) but as no payment has been received, your invoice is now considered as overdue. Please find attached the invoice and the contract between you and XX (creditor’s name and company)

In order to avoid further costs, please forward the payment to us and transfer the amount due not later than XX (time and date).

If you have any questions regarding the current situation, please do not hesitate to contact us by phone XX (phone number) or send us an email XX (email address).

We are sure the problem will be solved soon, as we have no doubt in your cooperation. 


Yours faithfully,

(name of contact person,

name of debt collection agency)


Such “soft letter template” can also be found in the website of CSA (http://www.csa-uk.com/).


2. Final demand (harsh debt collection letter template), officially known as “letter before action” including the full amount of debt, also the late payment costs and the interest cost.  It stresses on settling the debt as soon as possible, pointing out the total amount of the default payment and the deadline for settling the debt in full, before proceeding to legal actions.


Dear XX (name of debtor),

Despite our previous reminder(s), we still have not received any payment or answer from you. Therefore, we regret to inform you that if we do not obtain the payment of XX (amount) in full before XX/XX/XX (deadline), we will have no other alternatives but to undertake court actions against you in order to retrieve the debt amount for our client (creditor’s name and company). Please find the full debt amount and additional costs below:

Account value: XX (insert debt amount)

Late payment costs: XX (insert amount)

Interest cost: XX (insert amount)

Total: XX (insert amount)

Should your payment not be received in full within the next seven days starting from XX/XX/XX (current date) to XX/XX/XX (deadline), immediate court actions will take place. 

We would advise to treat this matter with urgency and we believe you will not ignore this final reminder. To save yourself the inconvenience of court actions, we kindly suggest settling the total amount of debt and additional costs as soon as possible.

We still trust court actions will not be necessary and look forward to receiving payment by return.


Yours faithfully,

(name of contact person,

name of debt collection agency)


3. Debt collection letter template, informing the debtor that legal actions have begun, and that from this point onwards, court representatives will contact the debtor. Such letters fall under different County Court Judgment. 


Dear XX (name of debtor),

We regret to inform you that due to your unpaid debt amount of XX (full debt amount, additional charges and interest cost) to XX (creditor’s name and company), from today, XX (date) we have passed your case to court. You are now to be contacted by official court attorneys, who will notify you of the hearing date. Therefore you will be served a subpoena to appear at court where you can present your defence.

If you wish to settle the outstanding amount, please do not hesitate to contact us. 


Yours faithfully,

(name of contact person, name of debt collection agency)


According to the CSA, the last type of debt collection letter template cannot threaten false legal actions in the meaning of court actions, which are known as impossible to be implemented, or which do not refer to the right jurisdiction. Such letters are considered to be inappropriate and illegal as well.

There are no strict rules for a debt collection letter template, but important guidelines should be followed in order the letter to be persuading (which can lead to successful collection of the debt amount even without using court actions) and legal.

Debt collection letter- features

The demand letter generally requests payment from the subject of debt but it is not sent before an invoice has become overdue. Depending on the stage of the letters, one can contain either a reminder with the total amount; a reminder with the total amount and a specific date used as a deadline for the default payment; or summarising all information above, plus an optional starting date for court actions, if the debt is not settled before this date. 

A debt collection letter template is usually used as a sample and guide, or just as information for both DCAs (Debt Collection Agencies) and debtors. Collection letter samples can be found even in Internet and are easily accessible in different websites, such as Law Institute Victoria (https://www.liv.asn.au)- for Australian residents, UK’s government website (https://www.gov.uk), New York’s State Unified Court System website (http://www.nycourts.gov), etc. Such letters have to be polite, non-harassing and formal, BUT not resembling the legal design of a court document (unless the letter is written by a law representative), as this is recognised as law violation.

Demand letters contain only legal statements and are never harassing or oppressive, as they fall under different legal acts, e.g. in USA such letters fall under the jurisdiction of the FDCPA (Fair Debt Collection Practices Act).

Debt collection letter

Legal regulations of debt collection letters

A debt collection letter has to be transparent and to clearly state the addressee, also it has to be in compliance with official debt law groups, e.g. the DCG (two abbreviations: Debt Consolidation Group and Debt Collection Guidance) or the OFT (Office of Fair Trading), CSA (Credit Service Association) official practice code- http://www.csa-uk.com/, CCA (Consumer Credit Act), FDCPA (Fair Debt Collection Practices Act), etc. If there is lack of information or misleading use of names or terms, it is considered as a breach and violation of the legal business practices. 

The debt collection letter is the most typical written form of communication by post. If the written contact is under the form of telegram or a postcard, the envelope must not point the nature of the content (according to the FDCPA, http://www.federalreserve.gov/boarddocs/supmanual/cch/fairdebt.pdf, “Communication with third parties”). 

Debt collection letters can be sent only to debtor’s home address. Other places, according to the FDCPA are considered as inconvenient or unusual places. Debt collection letters can be sent to such places only with the debtor’s prior consent. 

Used literature & External links

  1. http://www.artslaw.com.au/info-sheets/info-sheet/debt-recovery-letter-of-demand/
  2. https://www.liv.asn.au/PDF/For-Lawyers/Ethics/181012--Letters-of-Demand-Guidelines-(approved-by-
  3. http://www.thelawinsider.com/insider-tips/how-to-write-a-demand-letter/


Keywords for Debt collection letter template

debt collection letter template
Author: Helene Müller
Helene Müller has been providing Debtor Support at eCollect since 2013.