The consequences of not repaying a loan within the prescribed period are always the same: the lender initiates debt collection activities to motivate the debtor to pay the arrears. One of the tools used for this purpose is prompt.
The prompt is often confused with a pre-trial payment request. The first type of letter is milder and is used at the beginning of recovery proceedings. This also applies to loan arrears. If the initial recovery of payday loans does not bring the expected results, the lender sends an official request for payment. This is already a firm demand to return the loan within a specified period, which includes a warning about the possibility of taking legal steps to obtain a court order for payment.
What are the types of prompts?
Because no regulations specify what the prompt should look like, companies and institutions send it in various forms. The following types of prompts are most often used by lenders:
- written – in the form of a letter that is sent to the debtor by letter via traditional post,
- electronic – it is a payment reminder sent to the e-mail address that the borrower provided in the loan application,
- by phone – involves the telephone contact of a loan company representative with the debtor,
- SMS – this message contains information on arrears and is sent to the borrower’s telephone number provided in the application form.
Most loan companies use all of the above. forms of prompts, and electronic and SMS are especially popular because they are the fastest and cheapest.
The above types of reminders are also used by other institutions, banks, and companies. So you can also expect a prompt if your phone bill, Internet or electricity bill is late, installments are due, or if you overdraft on your personal account. Somewhat less frequently, reminders are used by debt collection companies, which usually send a payment request immediately.
What are the costs of prompts?
Preparation and sending of a payment reminder to the debtor generate certain costs for the creditor. For this reason, many people are afraid that they will be charged a prompt fee, which will increase the amount of commitment.
Many years ago, the costs of such reminders sent by banks and loan companies were very high, reaching even several dozen dollars for one letter. This did not help the debtors in solving the problem of debt, which is why provisions were created that limited the freedom of financial institutions in this regard.
The Consumer Credit Act of 12 May 2011, and above all its amendments, which entered into force in 2016, introduced limits on fees for arrears in loan repayment, including both interest and warning costs. They may not exceed the maximum default interest specified in Art. 481 § 21 of the Civil Code, which is calculated as twice the reference rate of the National Bank of Poland and 5.5%. In 2019, they amount to 14% per annum.
The introduction of the above limits meant that loan companies very rarely use fees for prompts and other debt collection activities. Instead, they only charge default interest. However, there are exceptions to this rule, so before using a payday loan or installment loan, it is worth checking the detailed terms of the contract and the price list of the given lender.
Similarly, bank prompt fees have been reduced or abolished, but there are exceptions here. Some institutions still charge their clients with the costs of sending reminders – e-mails and SMS are the cheapest (usually their cost is a few dollars from the notification), while the most, even several dozen dollars, have to be paid in the case of telephone debt collection, specially ordered by the bank to the company external.
How is the prompt sent?
Like the use of selected types of reminders, the deadline for sending them to debtors depends on the institution’s internal procedures. The common rule, however, is that a prompt is sent first, and a payment request only later, when the debtor does not respond to milder forms of admonition.
When it comes to loan companies, most respond very quickly to late repayments and usually use many types of reminders that motivate the borrower to settle the backlog. Sometimes the first reminder is sent the second day after the payment deadline. Very often it looks like this:
- 1-3 days after the payment date – SMS or e-mail with a short reminder of the commitment,
- 7-14 days after the payment date – a phone prompt and/or letter sent to the debtor’s address,
- 14-30 days after the payment date – request for payment, often of a pre-trial nature.
The above scheme is indicative because the debt collection path in each company looks slightly different.
Now you know more or less how to send reminders in loan companies. And after what time does the bank send a prompt? In this case, there is also no rule, because each institution has its own separate procedures. It is quite significant, however, that many banks use only traditional forms of reminders, i.e. they send them by letter to the debtor’s address, and this usually takes 14 days from the time the debt arises.
Prompt – how to write it correctly?
Payment reminders are commonly used in business transactions, which is why you can use them, for example, when you are executing orders as a freelancer and you want to ask for payment from your client. Below we suggest how to write a prompt in this case, i.e. what content should be included in it.
First of all, a request for repayment of receivables is best made in the form of an official letter and sent by registered mail to the debtor, leaving a copy with confirmation of posting. Thanks to this, it can be used in further debt collection proceedings, in particular at the judicial stage.
Elements that should be included in the content of the prompt are primarily:
- full name and address of the creditor (i.e. the person or company who requests payment),
- debtor’s details,
- place and date of the letter,
- wording about arrears along with a request or demand to settle it,
- arrears (the reminder only indicates the principal amount without accruing interest for the delay),
- basis of receivables (e.g. invoice, loan agreement),
- bank account number to which the arrears should be settled,
- possible deadline for paying off the debt.
And how to write a prompt to the court? The letter, which will appear in the files of the court case conducted to obtain the writ of execution, should be a firm request for payment. In addition to the abovementioned elements, it should inform the debtor about the next steps that will be taken in the event of his continued non-payment.