News article about Debt Collection letters | Legal Recoveries debt recovery services

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This product (the online recovery system) has revolutionised the administration and recovery of salary and overpayments. The whole system is very efficient and over the years has saved me a huge amount of time in administering this potentially embarrassing area of payroll administration.

Tim Kelsey, Payroll Manager
Buckinghamshire County Council

Debt Collection letters - have they lost their prominence in debtor communications strategy?

The ultimate aim of any debt collection agency is obviously to collect as much money as possible for clients. Traditionally this was done by sending a sequence of collection letters to debtors or making phone calls but these days, given the changes in lifestyles and technologies, letters are now becoming part of a wider communication and contact strategy that can now include SMS text messaging, email and the internet.

DCAs need to be able to engage and collaborate with debtors and so that means adapting strategies to those that will be most effective in reaching your debtors. There are different factors that need to be taken into account when deciding on your communication strategy for contacting debtors;

  • Lifestyle - are the debtors transient? At university? Working shift hours? Are they more likely to be reached by an email than a letter?
  • Profile of debtor - during the economic crisis in the last months we have seen an increasing number of debtors. This also includes new "generations" of debtors such as middle class debtors, or those over 50 years. Both of these groups may respond differently to different methods of contact.
  • Data - what data do you have available that you can use. At each touch point with the debtor you should try and collect as much information as you can such as mobile phone numbers and email address.
  • Debt type - you can always make an assumption about which contact method to use by looking at the type of debt eg is the debt from online activity?

You also need to remember that by using more modern contact methods such as SMS and email, you need to be able to provide payment options that are associated with these channels. LRC have provided a wide range of payment options for debtors that allow them to make payments online, over the telephone, over the counter with barcoded letters or payment cards and the option to link to our online payment portal from a SMS text.

Debt collection letters still vital

However, even with these new communication channels, debt collection letters are still important and have a key role in the communications strategy. They imply a seriousness and a business like approach that new contact methods such as SMS text messaging and email aren't able to. Indeed sometimes just the very fact that a third party has sent a business letter on letterhead can be enough to kick start the dialogue with the debtor.

Key points when writing your communication

There are a number of key points to remember when writing your letters, and indeed any other communication. They are;

  • Be Compliant - it's imperative you keep aware of any regulatory changes and ensure you amend your communication accordingly. An example of this was when the Civil Procedures Rules required LBAs should now allow consumers 14 days to respond rather than 7 where applicable and also to provide a list of free organisations and contact details where debtors can get debt advice.
  • Use Plain English - you need to remember your debtor is most certainly not from the legal world, so don't fill your letter with lots of legal jargon. If it's too confusing your debtor won't understand and may choose to ignore it or be frightened of it.
  • Treat Customers Fairly - do not use harassing or abusive language. You want to collaborate not confront. You should also explain to your debtor what will happen next or what the consequences may be eg how their credit rating may be negatively affected.
  • Non- threatening Action - make sure you don't threaten an action you have no intention of following through .
  • Use the Right Language - you may need to change certain language in your letters depending on who it's going to. For example when sending collection letters to debtors living in Scotland, ensure that the wording is per Scottish legislation eg you cannot refer to a Judgment as it's a Decree in Scotland. ....

In summary, the most effective contact strategy in the debt recovery lifecycle is a holistic approach. Debt Collection Letters are still important but no longer work alone and need to be part of a wider contact strategy employed by DCAs. The ultimate aim of any communication is to create a dialogue and encourage debtors to act. A certain amount of flexibility and creativity is needed.

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