Debt Collection Fees UK
Issuing a debt collection letter to your debtor is one of the first options available to recover the money owed to you. These letters can be sent by the debtor although collection rates are typically higher when issued by a debt recovery agency.
The type of letter required depends on the type of debt being recovered as commercial debt recovery, rent arrears collection, possession order execution and personal debt recovery all require specific letters. The letters can be ‘Letter of Demand’, ‘Letter Before Action’, ‘Statutory Demand’, ‘Legal Claim’ and ‘CCJ’ are just a few examples. Due to the complexities we always recommend discussing this with a debt collection agency and their debt collection solicitors.
When to send a debt collection letter?
Sending a debt collection letter serves two benefits.
Warn the debtor of potential legal actions. This should be sent in a format that allows you to confirm receipt i.e email fax or recorded delivery.
Confirm to the debtor that they are in debt and you wish to recover the funds.
Letter Before Action (LBA)
This is formal letter can be sent by yourself however collection rates are significantly higher at this stage when issued by a 3rd party debt recovery company. This lets a debtor know how serious the situation is. As these letters can be used as evidence at a later stage it is also beneficial to have a 3rd party trained professional involved at this stage.
In the UK this letter must be issued prior to taking a debtor to court.
Prior to issuing a debt collection letter, you should
Confirm the debtor has exceeded the contracted payment terms.
You have issued a reminder for payment.
You have tried to call them.
The final point isn’t a legal requirement but from our experience introducing 1000’s of creditors to the right debt collection agency. Mistakes can happen and sometimes a phone call is all that is required.
