A dunning letter is a creditor’s formal written notice to a debtor that a payment is overdue. Originating from the 17th-century term “dunning,” meaning persistent demand for payment, these letters function as escalating reminders intended to recover outstanding debts before more costly collection or legal actions are taken.
Typically, businesses send a series of dunning letters with increasing firmness. For example, the first letter is usually a polite reminder shortly after the due date, while subsequent notices warn of potential service suspension or referral to a collection agency. After about 90 days overdue, creditors may issue a final demand letter threatening legal action or debt sale to collectors, which can severely affect credit scores.
You have protected rights under the federal Fair Debt Collection Practices Act (FDCPA) if your debt is being collected by a third party. This act, enforced by the Consumer Financial Protection Bureau (CFPB), limits collector behaviors, prohibiting harassment, deceptive practices, and contact outside reasonable hours (8 a.m. to 9 p.m.). For more details, visit our Consumer Financial Protection Bureau (CFPB) article.
If you receive a dunning letter, do not ignore it. First, verify the debt’s legitimacy because scammers may send fake notices. Under the FDCPA, you can send a debt validation letter within 30 days to require proof of the debt, which pauses collection efforts until validated.
Next, communicate openly with the creditor or collector. If possible, pay the debt in full and obtain written confirmation. If unable to pay in full, negotiate a payment arrangement or settlement. Always keep detailed records of all communications and documents regarding your debt to protect your rights.
For small business owners who send dunning letters, ensure your communications are clear, professional, and polite but firm. Using accounting software to automate reminders helps maintain consistency.
Understanding a dunning letter and how to respond effectively can prevent credit damage and costly legal problems. For additional guidance on managing debts and credit, visit our Credit Repair article.
References:
- Fair Debt Collection Practices Act (FDCPA) details: ConsumerFinance.gov
- CFPB official site: consumerfinance.gov
- Investopedia on Dunning Letters: https://www.investopedia.com/terms/d/dunning-letter.asp
- Forbes: What To Do When You Receive A Debt Collection Letter: https://www.forbes.com/advisor/debt-collection-letter/
This article reflects tax and consumer protection laws accurate as of 2025.