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Debt Recovery Letter Of Demand

Debt Recovery Letter Of Demand Template for Philippines

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Debt Recovery Letter Of Demand

"I need a Debt Recovery Letter of Demand for PHP 2.5 million owed by a manufacturing company for unpaid equipment supplies, with the final payment deadline of March 15, 2025, and we've already made three unsuccessful attempts to collect."

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Document background
The Debt Recovery Letter of Demand is a critical document in Philippine debt collection practices, typically used when informal attempts to collect payment have been unsuccessful. It serves as a formal prerequisite to legal action and must be drafted in compliance with Philippine civil law, including the Civil Code of the Philippines and consumer protection regulations. This document is commonly used by businesses, financial institutions, and individuals seeking to recover outstanding debts, and its issuance often precedes more formal legal proceedings. The letter must clearly state the amount owed, basis of the debt, payment deadline, and potential consequences of non-payment. It's an essential tool in the debt recovery process, providing documentary evidence of formal demand and the creditor's attempt to collect the debt through proper channels before pursuing legal remedies.
Suggested Sections

1. Sender Details: Full legal name and contact information of the creditor or their authorized representative

2. Date: Current date of the letter

3. Recipient Details: Full legal name and address of the debtor

4. Subject Line: Clear indication that this is a formal demand letter for payment of debt

5. Debt Details: Specific amount owed, origin of the debt, and date the debt was incurred

6. Payment History: Brief summary of any partial payments made and current outstanding balance

7. Legal Basis: Reference to the relevant contract or basis for the debt

8. Formal Demand: Clear statement demanding payment of the specified amount

9. Payment Terms: Specific deadline for payment and acceptable payment methods

10. Consequences of Non-Payment: Clear statement of legal actions that will be taken if payment is not received

11. Closing: Professional closing with contact information for response or payment arrangements

Optional Sections

1. Previous Communications: Reference to prior attempts to collect the debt or previous correspondence

2. Interest Calculation: Detailed breakdown of interest charges if applicable to the debt

3. Settlement Offer: Optional terms for reduced payment if willing to settle for less than full amount

4. Payment Plan Option: Proposed installment payment terms if the creditor is willing to accept partial payments

5. Dispute Notice: Information about the debtor's right to dispute the debt and required timeframe

6. Without Prejudice Notice: Legal disclaimer preserving creditor's rights in future legal proceedings

Suggested Schedules

1. Statement of Account: Detailed breakdown of the debt, including principal amount, interest, fees, and payments received

2. Copy of Original Agreement: Copy of the contract or agreement that gave rise to the debt

3. Payment History Log: Detailed record of all payments made and dates

4. Interest Calculation Schedule: Detailed computation of interest charges if applicable

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant Industries

Financial Services

Banking

Retail

Manufacturing

Professional Services

Construction

Real Estate

Healthcare

Education

Technology

Telecommunications

Commercial Lending

Small Business

Insurance

Relevant Teams

Legal

Finance

Collections

Accounts Receivable

Credit Control

Risk Management

Treasury

Corporate Affairs

Operations

Relevant Roles

Credit Manager

Collections Officer

Financial Controller

Accounts Receivable Manager

Legal Counsel

Credit Control Specialist

Finance Director

Collections Supervisor

Debt Recovery Specialist

Corporate Lawyer

Business Owner

Chief Financial Officer

Credit Risk Manager

Accounts Manager

Treasury Manager

Industries
Civil Code of the Philippines (Republic Act No. 386): Primary law governing civil obligations, contracts, and debt relationships between parties in the Philippines. Particularly relevant are Book IV on Obligations and Contracts.
The Law on Obligations and Contracts (Civil Code Articles 1156-1304): Specific provisions dealing with the nature and effect of obligations, including monetary obligations and the requirements for demanding payment.
Usury Law (Act No. 2655): Regulates interest rates that may be charged on debts and loans, though substantially liberalized by Central Bank Circular 905.
Rules of Court, Rule 39: Provides rules on execution, satisfaction and effect of judgments, relevant for understanding the legal framework of debt recovery.
Consumer Act of the Philippines (Republic Act No. 7394): Contains provisions on debt collection practices and consumer protection, including restrictions on unfair debt collection practices.
The Truth in Lending Act (Republic Act No. 3765): Requires full disclosure of credit terms in debt agreements, which may need to be referenced in the demand letter.
Statute of Limitations (Civil Code Article 1139-1155): Prescriptive periods for filing actions to recover debts, which must be considered when making demands.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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