It's a surprisingly threatening letter if it is really a first letter. I've worked for several different credit unions and all of those had exact procedures in place for debtors. The first was usually a gentle reminder letter ( because everyone can make an honest mistake), the second was a stronger letter ( nothing like the one quoted here), the third was a person to person contact with the debtor. After that it was handed over to the solicitor.
As for the stories about people being sent to jail- usually a committal order is made only where either the person didnt turn up or they did turn up, the judge was satisfied they had the means to pay by installments and was further satisfied that they were deliberately not paying despite this. No-one who comes to court and proves they do not have the means to pay would be sent to jail.