Letters – Free Sample Letters

With both creditors and debtors being there in the market, there are not always very pleasant business moments. Some debtors pay their dues in the form of installments on a very regular basis. But there are some fishes that mess up the ocean. There are some debtors who do not pay up on time and avoid their creditors for the fear of being punished. The law for non-payment of dues is there but is not followed very strictly so the creditors have to end up writing off the amount from their accounts. However before doing so they try hard to recover their dues.

A Debt Collection Letter is a weapon that is used by the creditors to make an effort to recover what in finance jargon called “bad debt”. This is a payment which if not recovered is usually written off. But this ends up with a huge loss for the creditor. So the creditors make their best efforts to recover this money that for many reasons is not coming back to them as promised. The creditors write a Debt Collection Letter to their debtors reminding them about the pending payments. Usually these letters do not serve their purpose till they are written with reminders.

DOS AND DON’T’S OF DEBT COLLECTION LETTER

• A Debt Collection Letter should be written only when the payment that has been due has not come in and the last date has gone by
• It should always give the loan number or any other reference number in the subject line of the letter to make it easy for the reader to know the context of the letter
• If it is a first time reminder for an overdue payment, it should be done very politely
• Even though this letter is written by a creditor to the debtor, the tone of the letter should not sound bossy or authoritative or dictatorial
• The tone of the letter should first be empathetic because there could be a very genuine reason why the payment has not come, a death may be one such reason
• A Debt Collection Letter should be short and brief
• It must always have a date on the top left corner of the letter indicating its origin
• The letter should also give details of any deadlines if any
• A Debt Collection Letter should be firm but not threatening
• Any repercussions of not abiding by the deadlines given in the Debt Collection Letter should also be clearly mentioned in the letter
• Check for any grammatical or punctuation errors
• The Debt Collection Letter should not sound as a closed letter. Another payment option should be offered to the debtor to make it easy for her/him to pay
• The Creditor must leaver her/his phone number just in case s/he needs to be contacted
• To ensure that the letter has reached the debtor, it should always be either sent by courier or speed post so that the creditor gets a proof of delivery against it

SAMPLE DEBT COLLECTION LETTER

_______________ (Name and address of debtor)

_______________ (Date)

Subject: Payment overdue against loan installment

Dear Sir or Madam

This is with reference to your loan account number __________ against which you have taken a house loan for 20 years. The payment is due to us on the 1^st of every month that is already lying with us in the form of post-dated cheques.

We would like to inform you that your bank has returned the cheque that we presented in the bank towards payment for this month unpaid. We would therefore request you to please clear your debt for this month via a demand draft for Rs.____________ payable to ____________ (name of the company). Please have this cleared latest by ____________ (deadline date).

We hope not to be forced to take any legal course of action in case of non-payment.

We look forward to a long business relationship with you.

Best regards,

(Name of signing authority)

Debtors are people or institutions who take a loan against a property or in the form of hypothecation. Creditors are people or institutions that give this loan to be repaid in installments. Actually debtors and creditors are two sides of the same coin. None of them can survive without the other one.

Normally a loan is taken at certain terms and conditions and repayment options. But during the course of the loan repayment period a debtors circumstances change and s/he is not in a position to pay off the loan at the pre-decided terms. A Debt Negotiation Letter comes into action in such situations. A Debt Negotiation Letter is a tool in the hands of the debtors wherein they can share their current circumstances and request for a change in payment options.

DOS AND DON’TS OF DEBT NEGOTIATION LETTER

• A Debt Negotiation Letter should always be written as soon as the payment circumstances of the debtor have undergone a change
• It should preferably be addressed to the person in-charge of the debtor’s account
• The letter can be typed or hand written
• Even if it is a typed letter, the signatures should be done by hand and not scanned
• It should clearly give the reasons why another payment term is being requested
• Transparency of communication is of vital importance in Debt Negotiation Letter
• The preferred repayment option that is now being negotiated should be clearly specified in the letter with all details, such as payment term, installment amount, mode of payment, etc
• Since a change in payment term is being requested, the creditor has an upper hand so the letter should not sound dictatorial
• Since a Debt Negotiation Letter is written against a loan, the loan should always be referred in the letter
• The tone of the letter should be such that the creditor feels sympathetic towards the debtor
• The effect of the letter should be so strong that the creditor feels the request is being made face to face
• The Debt Negotiation Letter should end with a request for a confirmation from the creditor

SAMPLE DEBT NEGOTIATION LETTER

___________________ (Name of creditor’s company)

___________________ (Name of person)

___________________ (Address)

___________________ (Date)

Subject: Request for debt negotiation for loan # _________

Dear Sir or Madam

I have a car loan from your institution against Loan Repayment number _________. The term period of the loan was 5 years out of which I have already paid the installment for 4 years. As per my repayment track record, I have never defaulted in making my payment for the last 4 years. A copy of my bank account repayment statement is enclosed for your reference.

On ___________ (date) I met with a serious accident and all my surplus funds were diverted towards paying my medical bills. I am therefore in a financial crisis these days because of which I am unable to make a payment for the next installment due on _________ (date) and the following 11 payments.

May I request you to please reduce the installment amount to Rs.________ per month with which the installment repayment period increases from 11 months to 15 months? I shall be highly obliged if my request is considered favorably.

I look forward to hearing from you.

Thanking you in anticipation.

Best regards,

(Name of debtor)

Debtors and creditors are like life and breath are to each other. Either of them is there only if the other one is there. Business of creditors runs only if there are debtors in the market. If debtors have enough money to support themselves, they would not need the financial assistance of creditors or institutions that give loans.

A Debt Settlement Letter is an approval given by the creditor to the debtor on her/his request to either discontinue the loan or change the loan repayment scheme. It could also be written to the debtor towards a full and final settlement of the loan.

DOS AND DON’T’S OF DEBT SETTLEMENT LETTER

• A Debt Settlement Letter should always refer the request that the debtor had made in order to clearly indicate its origin
• It should be short and brief
• The subject line of the letter should indicate whether the request has been agreed upon or no
• The letter should only be addressed to the applicant along with her/his address
• The creditor should also mention her/his email address and phone number just in case s/he needs to be contacted for any clarifications
• The Debt Settlement Letter should give details of reasons if the request has not been approved
• All efforts need to be made to ensure that there is transparency in communication
• The letter should close with an open ended note even if the request has not been approved
• The tone of the letter should not be authoritative or dominating irrespective of the decision of the creditor
• There should be no grammatical or punctuation errors, as that does not speak well of the writer
• Usage of simple language is always a better option. One does not know who will be reading or interpreting the letter

SAMPLE DEBT SETTLEMENT LETTER

__________________ (Name and address of debtor)

__________________ (Date)

Subject: Debt Settlement Request Approved

Dear Ms/Mr ____________

This is in response to your request for paying the balance payment towards your loan application number ____________ as a lump sum amount.

We are glad to inform you that your request for full and final settlement of your debt has been approved. You are requested to pay a lump sum amount of Rs.__________ towards the full and final settlement of your loan. As per the agreed terms and conditions, since the full and final is being done in one big installment only after the 3^rd year of your taking the loan, no penalties will be levied on your account.

Once we receive the final payment we will do the paperwork needed to close your loan account.

We look forward to assisting you for any other loan requirement in the future.

Best regards,

(Name of creditor)