Collecting A Debt: The Art of the Ask

As I previously blogged, the best way to collect a debt is to make sure you have the right documents.  If a debt is in default, the first step is to ask for your money back.

This sounds easy in theory, but it’s important to properly state your claim.  In Arizona, at least, the court will want to see that you’ve made a good faith attempt to resolve the dispute before marching into court.  In fact, as an attorney, one generally is required to provide notice of the debt and take certain precautions that my client owns the debt before marching into court.

As such, it’s important to include the following information when requesting that someone repay a debt:

  • Explain the terms of the agreement.
  • Explain that the debtor is in breach
  • Explain how interest or late fees are calculated
  • Provide a deadline to respond.
  • Provide standard Fair Debt Collection Practices Act (FDCPA) Language

Taking these steps will take the emotion out of collecting a debt.  As such, a standard debt collection letter may be simple and explain the following:

Dear [Debtor]:

This firm represents [creditor].  [Creditor] paid you $100,000 on [Date].  The contract required you to pay back the note by [Date].  The maturity date of this loan has passed, and the loan has not been paid.

Your failure to repay acts as a breach of the contract.  As a result of the breach, the my client is damaged by the amount of outstanding principal, plus interest fees of [x%] and late fees of [y].

The total balance owed is now [Total].  We demand you pay this amount within 30 days. If I do not receive that amount, then I will have move forward with this claim.

Sincerely,

David Degnan

THIS FIRM ACTS AS A DEBT COLLECTOR AND ANY INFORMATION WILL BE USED FOR THAT PURPOSE.