Debt Recovery Letter Template for Canada

A Debt Recovery Letter is a formal written demand asking someone to pay money they owe you. It's often the first step Canadian businesses and individuals take to collect unpaid debts before considering legal action through small claims court or collection agencies.

These letters typically outline the original debt amount, payment history, any interest charges under provincial regulations, and a clear deadline for payment. A well-crafted recovery letter can help maintain business relationships while protecting your legal rights to collect - making it an essential tool for managing accounts receivable and resolving payment disputes.

Send a Debt Recovery Letter when an invoice remains unpaid beyond your standard payment terms - typically 30 to 90 days in Canada. This formal reminder works especially well for business-to-business debts, overdue rent payments, or unpaid professional services where you have clear documentation of the original agreement.

Time your letter strategically: send it early enough to show you're serious about collection, but after making reasonable attempts to contact the debtor by phone or email. Many Canadian businesses send their first recovery letter around 60 days past due, before the debt becomes harder to collect or limitation periods become a concern.

• Collection Form Letter: Initial friendly reminder with basic payment details and gentle request for action
• Debt Collection Validation Letter: Formal request verifying debt details and documentation, often used for disputed amounts
• Debt Collection Final Notice Letter: Last warning before legal action, including consequences and firm deadlines
• Collection Settlement Letter: Offers compromise payment terms to resolve the debt quickly

• Business Owners & Finance Teams: Send Debt Recovery Letters to manage accounts receivable and maintain cash flow
• Collection Agencies: Use these letters as part of their professional debt recovery process, following provincial regulations
• Property Managers: Issue letters to collect overdue rent or maintenance fees from tenants
• Legal Professionals: Draft and review letters to ensure compliance with Canadian debt collection laws
• Debtors: Receive these letters and must respond or risk escalated collection actions, including potential legal proceedings

• Original Agreement Details: Gather contracts, invoices, and payment terms showing the debt's origin
• Payment History: Document all payments received, dates, and remaining balance with applicable interest
• Contact Information: Verify current mailing address and contact details for the debtor
• Communication Records: Collect copies of previous payment requests, emails, or call logs
• Legal Requirements: Check provincial collection rules - our platform ensures your letter includes all mandatory elements and follows Canadian regulations
• Timeline Planning: Set reasonable payment deadlines and outline next steps if payment isn't received

• Creditor Details: Full legal name, business number, and contact information of the party seeking payment
• Debt Information: Original amount, current balance, interest charges, and payment history clearly itemized
• Payment Terms: Specific deadline for payment and acceptable payment methods
• Legal Authority: Reference to the original agreement or basis for the debt claim
• Collection Statement: Clear notice of potential legal action if payment isn't received
• Provincial Compliance: Required disclosures under local collection laws (our platform automatically includes these)
• Signature Block: Name and title of authorized representative sending the letter

A Debt Recovery Letter often gets confused with a Letter Before Action, but they serve different purposes in Canadian debt collection. While both deal with unpaid amounts, their tone, timing, and legal implications differ significantly.

• Purpose and Timing: Debt Recovery Letters are typically sent earlier in the collection process as a formal reminder, while Letters Before Action represent a final warning before court proceedings
• Legal Weight: Recovery letters focus on maintaining business relationships and encouraging voluntary payment, whereas Letters Before Action explicitly threaten legal proceedings and must meet strict pre-litigation requirements
• Content Requirements: Recovery letters include payment history and settlement options, while Letters Before Action must detail specific legal claims and deadlines under Canadian civil procedure rules
• Tone and Approach: Recovery letters maintain a professional but cooperative tone, while Letters Before Action adopt a more formal, litigation-focused stance