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Collection Letters Laws and Regulations


Businesses are required to adhere to all federal and state collection letters laws and regulations. It’s nearly impossible to own a business and never have to collect an overdue debt because some customers and clients will just simply not pay their debts. While debt collection is a necessary task to ensure the profitability of your company, there are laws that regulate just how aggressive you can be when attempting to collect debt from customers.

The first step in collecting debt legally is to send out collection letters. The basic purpose of debt collection letters is to remind debtors of their obligations. Collection letters can also serve as proof in court proceedings that companies took the necessary, legal steps to collect the debt. These letters should inform the customer that you have initiated the debt collection process and give the customer instructions on how to dispute the debt. To learn more about collection letters laws and regulations, you should:

1. Research debt collection laws and regulations.

2. Look for examples of appropriate wording for collection letters.

3. Consult with a collections professional on writing collection letters.

Familiarize yourself with collection letters laws

State and federal laws prohibit businesses from engaging in certain practices when collecting debt. Collection letters laws and regulations such as the The Fair Debt Collection Practices Act regulations protect the rights of debtors and prohibit companies from using language that would be abusive or harassing.
Federal Trade Commission.

Be careful when choosing wording for collection letters

The words used in collection letters are very important and, if not chosen appropriately, can lead to a lawsuit. The letter cannot include any information that is deceptive, false or misleading in any way. Collection letters should include basic information about the debt owed: date of invoice, total amount due and due date.

Seek professional advice on drafting collection letters

Collecting debts requires a large degree of diplomacy and isn't always an easy task. Attorneys and debt collection professionals can provide you with sample collection letters to ensure that you not only comply with debt collection laws, but also use words and a tone that will help you encourage, in a non-threatening manner, debtors to pay what they owe.
  • To retain customer goodwill and successfully collect debt, companies should consider keeping collection letters to one page, using short sentences and paragraphs with simple words and a non-threatening tone. The letter should also be specific in what is owed and how payment should be remitted while conveying a sense of urgency.