Debt Recovery Letter

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Debt Recovery Letter

If your debtors have not paid the due amount on time, the recovery of such debts follows from polite requests to legal proceedings. A debt recovery letter is one of the process of recovery of credited amount which serves as a ‘pre-legal’ method for recovery of bad debts and past-due payments. It is basically a written reminder sent by the Creditor, a DCA (Debt Collection Agency), or a Private Debt Recovery law firm.

Debt recovery process also takes place when a loan such as a credit card balance goes unpaid and the creditor hires a third party to focus on collecting the money. The payment of a due amount is important because it is related to one’s credit score. If a person gets contacted by a Debt Recovery Agency, they have defaulted on a loan and have delinquencies, it may impact their credit score by getting reported to the credit bureaus.

Debt Recovery for a Company

Debt Recovery for a Company is dealt under Insolvency and Bankruptcy Code, 2016 by the Insolvency and Bankruptcy Board of India (IBBI). Earlier, the Debt Recovery Cases were being dealt by Debt Recovery Tribunal, a Quasi-Judicial Body but now they are presented in the National Company Law Tribunal (NCLT).


  • Recovery of a debt owing to a person/organization.
  • Follow up of a payment when the due date of payment has expired and it is still pending.
  • To commence a formal debt recovery communication.


  • Name and Address of Debtor, Creditor
  • Debt amount
  • Due Date of the debt
  • Interest payable on the debt (if applicable)
  • Legal threat against the debtor if it remains unpaid

Debt Recovery Process

STEP 1: A formal first reminder letter is sent mentioning the credit amount with specific details of purchased goods/ services, purchasing date, the due date to pay and any other essential information. Mentioning a new due date is important.

STEP 2: A formal second reminder letter is sent if the creditor fails to pay the amount till the mentioned new due date of recovery. The policy regarding late payment is conveyed including the applicable interest rate on unpaid amount, delay of specific days after which the agreement between the purchaser and seller might end. A new due date is mentioned here.

STEP 3: A formal third & final reminder letter is sent if the last letter remained ineffective for payment of unpaid amount. In this letter a new due date is mentioned for the payment after which a legal proceeding should be initiated.

STEP 4: After failure of all the reminder letters and the amount still remains unpaid, a debt recovery agency should be contacted or a legal proceeding should be initiated against the purchaser before any competent authority.

 What’s Included

  • Consultation with our Experts
  • 1st Draft of debt recovery letter
  • Final draft of recovery letter after revisions

 Documents Required

  • Proof of delivery of goods/ service
  • Copy of invoice
  • Purchase Agreement, if any


What legal action can be taken to recover a debt in India?

To recover the debt, both Civil and Criminal action can be taken with the help of expert Debt Recovery Advocates. Civil proceedings include sending notice to the debtor and filing a complaint to initiate civil proceedings under Negotiable Instrument Act, Civil Procedure Code, or Insolvency and Bankruptcy Code.

Criminal proceedings are to lodge an F.I.R in a police station of an appropriate jurisdiction.

When to send a legal notice for debt recovery?

A legal notice for debt recovery can be sent before filing a case for recovery of debt amount either as a civil suit or under DRT (Debt Recovery Tribunal) or under IPC.

What documents must be required to prove the debt to a person?

Any document which is an evident proof to establish the grant of money, is enough to prove the debt such as any document, contract, message, telephonic conversation, mail or post, can serve as proper evidence in Court. Bank account transactions, promissory notes, a contract or other payments so made serve as legal evidence of the lending of such money.

Is there any limitation period to file a civil suit for debt recovery?

Yes, the limitation period to file a civil suit for debt recovery is 3 years from the date of the last payment made or the acknowledgment of debt by the debtor.

What are the Debts Recovery Tribunals?

The Debts Recovery Tribunals have been established by the Government of India under an Act of Parliament (Act 51 of 1993) for expeditious adjudication and recovery of debts due to banks and financial institutions.

Does the Insolvency and Bankruptcy Board of India (IBBI) deal with individual and partnership firms?

No, not at present. Insolvency and Bankruptcy Board of India (IBBI) do not deal with individual and partnership firms. They are being dealt with Debt Recovery Tribunal.


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