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Debts & Collections

Debts & Collections
Credits & Loans
Banking

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1 Final Demand for Payment

When a customer or client has repeatedly failed to bring an account up to date, in other words failed to make payments that are due, it may be necessary to make a final demand for payment. At the same time it might be in the best interest of both parties to try and maintain the relationship, therefore a non-confrontational final demand might be the best option.

Use this document to make a final demand for payment in a non-confrontational manner, but let the customer know that the account is seriously delinquent and that action will be taken if the account is not brought up-to-date. Note that by providing a 10-day notice, as this letter does, the company obligates itself to take action after 10 days. Failure to do so will send the message that you're not to be taken seriously on this matter, and further collection efforts will be even more difficult.

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2 Promissory Note

A Promissory Note, often referred to as a Note, is a signed promise to pay a debt. The person making the promise (the borrower), makes an unconditional promise to pay the lender, or holder of the Note, a fixed sum of money over a fixed amount of time. In the event payment is not made, the lender has the ability to sue for non-payment, whereas the borrower has no right to counter sue. A party also cannot sue for punitive damages (damages above and beyond the amount specified in the Promissory Note) based upon the debt owed. Promissory Note is not a simple acknowledgement of debt; it is a legal promise to repay the debt. This Promissory Note is a promise to repay a specific sum, and has the option to include interest payments. This Note may also be secured by some item, such as a motor vehicle, piece of jewelry or other item of value.

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3 Debtor's Settlement Offer

There are times and circumstances during which creditors will accept reduced payment in full settlement of a debt. The savings resulting from these agreements can be substantial, and you can often negotiate an improvement in your credit report as well. The law of contracts binds you to the terms of your offer, so be certain that you can do what you promise. The creditor can respond in three ways. He can accept your terms, in which case you have a contract. He can vary the terms of your offer, in which case, you are still negotiating. Or he can reject your offer outright. If you are behind on your payments and suspect that your creditor may be open to a settlement offer, use this form to offer a settlement on terms that you can live with.

When a debtor desires to settle a debt with a creditor he or she may do so by initiating negotiations with a settlement offer letter. Use this letter to make an offer to a creditor to settle a debt and set forth parameters of the settlement.

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4 Notice of Intent to Repossess

In the event of a debtor's failure to pay it may be necessary the goods which the debtor has failed to pay for. If this situation arises it is important to send written notice to the debtor and warn them of your intent to repossess. This will create a paper trail should legal proceedings become necessary, as well as give proper warning to the debtor and a last chance to make good on the payment.

Use this document to notify a debtor of your intent to repossess the good or goods they have failed to make timely and/or full payment on.

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5 Payment Request (1st)

Upon the failure of a client or buyer of goods to maintain his account, in other words keep up to date with payment, a seller of goods may remind the client of his failure to pay. A payment request is often enough to prompt payment from a buyer who has simply forgotten. Use this document to notify a client or buyer of goods that they still owe money on their account and remind them to pay.

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6 Agreement to Compromise Debt

On occasion a company or individual will encounter a customer who clearly cannot pay, despite the desire to do so. In this case, it may be better to accept a partial payment than to try in futility to collect the entire amount. In this case the best plan may be to a lesser amount which the debtor will agree to pay off.

This document is an agreement between debtor and creditor to a lesser debt amount and both parties agree to comply with the lesser amount and the payment terms set forth.

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7 Second Payment Request

Following a first request to make payment, if the customer or client has still not paid, they may need a second reminder. This letter not only further notifies the customer of default but also creates documentation of the failure to pay should legal issues arise.

Use this document to issue a second notice of failure to pay and to request payment.

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8 Notice of Assignment to Collection Agency

After multiple notices of late payment and/or demand for payment a company may need to take action with regards to a customer who shows intent to avoid payment. Often a company may assign a debtor to a collection agency who will then be in charge of retrieving payment from the debtor. A collection agency will either buy the debt outright or receive a percentage of the payments when or if they are received. Use this document to notify a debtor of your full intention to collect on the account, and let the debtor know you are turning the account over to a collection agency.

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