When to use it
Send it when the reminders have not worked and you intend to hand the case over to debt collection. The letter is not optional: without a valid formal demand, collection may not be commenced, and the collection costs cannot be passed on to the debtor — you are left carrying them yourselves. Most creditors combine the formal demand with the third reminder. That is permitted, provided the content is in order.
It has to be right
The wording is rarely the problem. It is the deadline, the fee and what the letter leaves out — and the mistake costs you the expenses, not the debtor.
- The deadline must be AT LEAST 10 days — nine days is not ten, and the formal demand is then invalid
- It must state expressly that the case will be handed over to debt collection if payment is not made
- It must state that this will impose further costs on the debtor
- Hand the case over only ONCE the deadline has expired — not before
- Keep documentation of when the letter was sent, and to where
How to fill it in
Most placeholders are trivial. These are not.
- [DATE — AT LEAST 10 DAYS AHEAD]
- The most dangerous line in the whole letter. Nine days is not ten. If the deadline is too short, the formal demand is invalid, and the entire basis for claiming the costs falls away.
- [COLLECTION PARTNER]
- Naming them is not required by law, but it makes the notice concrete. A letter that threatens something unspecified moves fewer debtors than one that says who and when.
- [TOTAL]
- Must be a correct statement of the claim. If the claim is overstated, you hand the debtor an objection that can take months to clear out of the way.
Frequently asked questions
What happens if the deadline is too short?
The formal demand is invalid. If the case is handed over anyway, the collection costs cannot be claimed from the debtor — you end up paying them yourselves. It is the most common and most expensive mistake in in-house collection.
Must the formal demand be sent by registered post?
No, that is not a requirement. But you must be able to document when the letter was sent, and to where, if the debtor later disputes having received it.
May I hand the case over before the deadline has expired?
No. The deadline must have expired before the case may be handed over. If you do it earlier, the precondition for the costs is gone.
Do the rules also apply when I collect the debt myself?
Yes. The requirement of a formal demand and of good collection practice applies to the creditor conducting in-house collection as well — not only to collection agencies.
How to use it
Legal disclaimer. The template is generic and free to use. It is not legal advice and does not take account of the circumstances of your particular case. Rates, deadlines and statutory references change — check them before you use the document. If the claim is large, disputed or heading for court, call us before you send anything.