Sample Recover Letter

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Letters of demand

A letter of demand is usually sent when you have tried unsuccessfully to get your invoice paid and it is the right time to take more serious action. Often this is the final reminder letter before taking legal action. You can send it yourself or ask a lawyer to write it on their letterhead.

Before writing a letter of demand, it is important to send first and second reminder letters. These can be friendlier and help you maintain your business relationship with the hirer if this is important to you.

A letter of demand states how much is owed, what for and when the invoice needs to be paid. It may also include a warning that you will consider legal action if the debt is not paid by a particular date. The title 'Letter of demand' at the top of the page lets the hirer know you are serious about getting your money.

It is important to understand the consequences of sending a letter of demand. While ADR is an assertive approach, which can reduce damage to and even improve business relationships, sending a letter of demand could inflame a dispute. Even so, this action may be necessary to recover a debt.

Before sending your letter of demand, it may help to get some advice from someone who has had experience with debt recovery before. It is also important to find out who owns the business that owes you money, as it may not be the person with whom you made the original agreement. The best approach is to send your letter of demand to the person who owns the business.

Sample letter of demand

Letter of demand

[your business name, address and contact details]

[hirer's name and business address]

Dear [name of hirer]

I am writing in relation to the amount of $[amount 'including GST']. According to my records this was due to be paid by you on [date] and remains outstanding. My requests for payment are listed below.

The amount relates to [descriptionof services] provided to you at your request, on [date].

Please find enclosed a dated copy of the invoice and note that it specifies [describe payment terms and instructions]. I have also enclosed the following documents:

1.  [name of document]

2.  [name of document]

[Documents may include previous requests for payment andlist and enclose any other relevant documents that support your claim for the amount owing].

Please be advised that I demand payment of the invoiced amount [plus an amount of ${amount} for late payment interest as agreed in our contract dated {date}] within seven days of the date of this letter.

Late payment interest: The total amount owed may include late payment interest only if your written contract contains a late payment interest clause.

Payment should be made by [describe manner in which you would like to receive payment i.e. bank account for deposit or address for cheque to be posted].

If payment is not received within seven days of the date of this letter I reserve the right to take legal action to recover the monies without further notice to you.

Yours sincerely


[your name and title]


Example: when to send a letter of demand

Abdul, an independent contractor, fixes computers for a living. One day, Troy, a small distribution business owner, called Abdul in a panic – his computer system had crashed and he was unable to process any transactions manually. Abdul understood Troy's situation and postponed two other jobs to help Troy with his problem. He was on site repairing Troy's computer within 30 minutes.

Abdul explained that he charged an hourly rate of $150 (plus GST) in addition to any required hardware. Troy agreed to pay 'whatever it took' to get his computer working again because his business depended on it.

It was a big job that involved replacing the hard drive. Abdul worked for six hours and installed a hard drive that cost $1,200. Abdul invoiced Troy for the cost of labour and parts – $2,100 plus GST. Abdul sent Troy an invoice with 14-day payment terms and details of the payment methods available.

Three weeks later, Troy had not paid the bill. Abdul phoned Troy, who said he would pay the invoice the next day. A further two weeks went by without the payment being made. Abdul tried to call Troy again, without success. Abdul decided to send a late payment reminder letter but Troy still did not pay the account.

After two weeks and more promises from Troy to pay, Abdul sent a second reminder letter explaining that if Troy didn't pay, Abdul would have difficulty paying his suppliers for the hard drive, which he had bought on credit. 

Abdul decided that he didn't want to do any more jobs for Troy. He was upset that Troy hadn't paid him after he had gone to so much trouble to help him at the risk of disappointing his other customers. Abdul decided to give Troy one last opportunity to pay the invoice by sending a letter of demand. If Troy doesn't pay the invoice soon, Abdul intends to apply to the Small Claims Court.

Letter of demand checklist

  • Have you have already tried friendlier means to recover the debt, such as a polite phone call or late payment reminder letters?
  • Does it include precisely accurate information? Could anyone say that something in the letter is false or misleading?
  • Does it include a late payment interest rate? (This should only be included if it was specified in the contract.)
  • Does it inform the hirer of any action you are not willing to take? (You should only mention action that you are prepared to take.)
  • Is it polite and respectful? (It shouldn't harass the hirer.)
  • Have you signed and dated it?
  • Have you attached copies of all relevant supporting documentation? (For example, a contract, invoice, first and second late payment reminder letters and any relevant emails, faxes or letters.)
  • Have you kept a copy of the original documents and the signed letter of demand?

Important: Make sure you send the letter by registered post and that you request a 'signed proof of delivery' card (keep this card in case you need it as evidence in court later).

Getting a lawyer to write a letter of demand

A lawyer can write a letter of demand for you on the law firm's letterhead. This can sometimes encourage the hirer to pay the debt promptly. Most law firms charge a set fee to write a letter of demand on your behalf. This can be a relatively inexpensive and effective way of recovering your debt. Make it clear to the lawyer that the letter of demand is all you are asking for. Getting advice from a lawyer will usually cost you more.

Table of contents

A debtcollection letter 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:

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 follows:

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)

Such “soft letter template” can also be found on the website of CSA (

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 treating 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)

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 the 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 on the Internet and are easily accessible in different websites, such as Law Institute Victoria ( for Australian residents, UK’s government website (, New York’s State Unified Court System website (, 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 legal 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).

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-, 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 communication is under the form of a telegram or a postcard, the envelope must not point the nature of the content (according to the FDCPA,, “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 

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