Credit and Collection Letters

Model Letters and Guidelines for Dealing with Credit Issues and Collecting Your Money

Nothing captures the attention of a reader so much as money issues—their money or yours. Whether depositing, withdrawing, lending, or borrowing, you want to make sure you provide all the facts.

When you have borrowed money, assure the reader that you intend to repay the money owed, even if that becomes necessary under altered terms with lesser amounts or over a longer period. Although many people consider their financial situation confidential, you will do well to explain your current difficulties to those who are lending you money. They consider explanations a show of good faith. Another way to motivate creditors to work with you during difficult times is to remind them about past business you’ve given them and state your intention to again do business with them under better conditions.

When requesting a loan, give a full explanation of how you intend to use the money and state your plans for repayment. Be specific as to your calculations for where the money will come from to repay the loan. And even when addressing friends or family, use a businesslike, not a flippant or pleading, tone to convey your sincere need of the money and your firm intention to repay the money.

When refusing a loan to friend, remember that you are not obligated to give a reason—although doing so makes your refusal sound less arbitrary and more thoughtful. For example, these statements may seem firm, yet less harsh. “I feel uncomfortable in making personal loans for any reason to anyone.” “I’m not financially in a position to make loans to anyone.” “My spouse and I have made a personal commitment to each other never to lend money to a friend or a relative because of the hard feelings that inevitably develop around such circumstances.” “My own job is rather unstable.”

When refusing a loan, however, do express your understanding of the need for the money. Often times, when the requester hears a “no,” he or she thinks that you are saying “no” simply because you don’t earnestly see the need as critical or urgent. Consider these comments: “I understand how much you need the money.” “I can understand the difficulty of the situation.” “You have cause for concern. I see your predicament.” “A couple thousand dollars, I know, would make a big difference in your situation. I understand that.”

Try to use positive phrasing with your turndown: “I’m afraid I simply can’t make such a loan. I need all my available resources to handle my own commitments.” “I wish I could help in this incident, but I can’t.” “I wish I had the extra money for situations like this, but I just don’t. We live on a limited income ourselves.”

Instead of focusing on what you’re not going to provide, focus on your own needs/plans for the money or your own positive philosophies about personal loans.