THE DEBT COLLECTION LETTER

When a business customer fails to pay on time, a correctly drafted debt collection letter can be the key to quickly recovering your outstanding receivables. The debt collection letter serves as the formal notice informing the debtor that non-payment will lead to debt collection proceedings, while also documenting your claim legally.

Advantages of a correctly drafted debt collection letter:

Ensures your company complies with the requirements of the Debt Collection Act.
Communicates professionally with the debtor and helps maintain good business relations.
Increases the likelihood of voluntary payment from the debtor.
Creates documentation if the case is later transferred to debt collection or a lawyer.
Helps maintain your company’s liquidity and financial stability.

At KROMANN Law Firm, we ensure that your debt collection letters are drafted correctly and effectively, so you can recover your receivables quickly and securely, without legal risks.

WHAT IS A DEBT COLLECTION LETTER?

A debt collection letter is the formal notice to your debtor that non-payment within a period of at least 10 days will result in the case being transferred to debt collection. The letter serves as a final warning and is a legal requirement before a debt collection case can be initiated.

A debt collection letter is also referred to as a demand notice or debt collection warning, and it is crucial that it complies with all requirements of the Debt Collection Act – otherwise you risk losing the ability to recover your outstanding receivable.

At KROMANN Law Firm, we ensure that your debt collection letter is legally correct, professionally drafted, and effective – so you stand strong throughout the entire debt collection process.

WHY IS THE DEBT COLLECTION LETTER IMPORTANT?

A debt collection letter is essential because it gives your debtor a final opportunity to pay before the case is sent to debt collection – while also ensuring compliance with legal requirements. If your customer has failed to pay after repeated reminders, the next step is often debt collection. However, without a correct and timely debt collection letter, you may lose the right to claim debt collection costs and, in the worst case, violate Section 10 of the Debt Collection Act, which may result in penalties.

Acting quickly on non-payment is equally important. If you wait too long, your claim may become time-barred – typically after 3 years.

At KROMANN Law Firm, we help you handle non-payment professionally and lawfully, ensuring that you avoid losses and remain in a strong position throughout the recovery process.

REQUIREMENTS FOR THE DEBT COLLECTION LETTER

Sending a debt collection letter is essential for moving forward with your case – but it is just as important that the letter complies with legal requirements. An invalid debt collection letter is treated as if no formal demand has been sent at all, and may therefore prevent you from initiating debt collection proceedings. It should also be noted that the letter can only be sent once the claim is due for payment.

To be valid, a debt collection letter must provide the debtor with all necessary information to understand and assess the claim. It must as a minimum include:

The name and address of both creditor and debtor
A description of the goods/service and the amount owed
The date the claim was issued and from which date interest is calculated
A payment deadline of at least 10 days
Information that non-payment will lead to debt collection
Any reminder and debt collection fees
Information that the case will be transferred to a lawyer if payment is not made

You may send the debt collection letter yourself, but with professional assistance you avoid errors that can cost you time and money. At KROMANN Law Firm, we ensure that your debt collection letter complies with all requirements, so you can move forward quickly and safely in the process.

WHEN CAN YOU SEND A DEBT COLLECTION LETTER?

You may send a debt collection letter to your debtor no earlier than three working days after the due date – i.e. on the fourth working day. If your invoice is due on a Monday, you can therefore send the demand letter on Friday of the same week.

A common misconception is that you must send three reminders before issuing a debt collection letter – this is incorrect. There is no legal requirement for a specific number of reminders. However, we generally recommend sending 2–3 reminders first, as non-payment is often due to simple oversight.

It is important to remember the following:

There must be at least 10 working days between each reminder.
A debt collection letter should be sent when it is clear that the customer will not pay voluntarily.

At KROMANN Law Firm, we advise you on the optimal approach – ensuring that you neither waste time on unnecessary reminders nor act too early.

THE DEBT COLLECTION LETTER IN PRACTICE

When a customer does not pay, it is common practice to send up to three reminders, often with reminder fees. In many cases, the debt collection warning can be included as part of the third reminder, which is an effective way to conclude the reminder process.

A demand notice can be sent via post, email, SMS, or other digital solutions. There is no legal limit to how many debt collection letters you may send – however, they must not take the form of harassment. If the debtor is a private individual, the letter should according to good debt collection practice not be marked with words such as “reminder” or “debt collection letter” on the front, as this may be perceived as unnecessarily threatening.

Good advice when issuing a demand notice:

Always attach the original invoice – it serves as both documentation and information basis.
Give the debtor a 10-day payment deadline from the date of dispatch.
If the debtor does not pay or raise objections within the deadline, the claim may be sent to debt collection.
If objections are raised, the case must be handled through the courts – not through debt collection.

At KROMANN Law Firm, we ensure that your case does not stall, and we help you recover your outstanding receivables – whether the case proceeds through debt collection or the courts.

AVOID YOUR CLAIM BECOMING TIME-BARRED – CONTACT US TODAY

As a general rule, a claim against a debtor becomes time-barred 3 years after the due date. It is therefore essential that you act in time and ensure that a demand notice is sent before the limitation period expires.

However, it is important to note that a demand notice alone does not interrupt the limitation period. To stop the deadline, either:

the debtor must acknowledge the debt, or
you as the creditor must take legal action, e.g. bring the case before the courts.

If you are unsure how to avoid losing your receivable, at KROMANN Law Firm we help you ensure that your claim does not become time-barred – and we take the necessary steps to recover it.

You are welcome to contact KROMANN Law Firm on tel. +45 8618 1102 or by email at kontakt@advokatkromann.dk to learn how we can assist you.