Sending a clear, concise demand letter is an important step to take when a person or company owes you money but has not paid. Often, a well-written, simple demand letter is more effective than a verbal conversation or threats.
Some courts require a formal letter before taking further steps, like filing a lawsuit. Even if the court in your jurisdiction doesn’t require a formal letter, sending one shows the other party you are serious about pursuing payment. It also documents your collection efforts if you do sue.
A demand letter may also be referred to by these names:
Money owed letter
Final demand for payment
Demand letter for money owed
Who should use this form?
Any person or business can use this type of letter to make a written demand for money owed. In most cases, a demand letter is used as a final attempt to get the other party to pay. Your first attempts might include
If the other party ignores you or refuses to pay, it might be time to send a demand letter.
What to include in a demand letter
Your letter should state exactly how much you’re owed, why, and when you expect payment. You can also let the other party know that you intend to file a lawsuit if they do not comply by the deadline.
Make sure you include these details in your letter:
The exact dollar amount owed. Attach any invoices or receipts to back up your claim.
The reason you believe this money is owed to you. Include dates to establish a timeline of events.
Any previous attempts you’ve made to get payment. Again, include any relevant dates. This may include times you called—whether you spoke to the person or left a message—or emailed, or otherwise tried to reach the person. Include any response you received.
Give a date by which you expect to receive payment. If you’re willing to accept a lower amount or set up a payment plan, mention this as well. This may depend on the situation. For example, most companies should be able to pay $2,000 at once, but an individual may have trouble coming up with that much money.
If you’re willing to take the matter to court, mention that you will do this if you don’t receive payment by the deadline.
Keep in mind that if you do go to court, the judge in your case will most likely read your letter. Keep your letter free of attacking and antagonistic language. A well-organized, polite letter will be more likely to help the court understand your case, and to see you as a reasonable party.
Send your letter by certified mail with return receipt requested. Although this is not strictly necessary, it will give you proof of mailing and signed proof that the other person received your letter. This can be helpful if you do end up having to go to court.
Keep a copy of your letter for your records and to use in court if necessary. Ideally, the other person will pay as requested. If not, you’ll want to do a cost-benefit analysis, and decide whether the amount owed is worth the cost of filing in small claims court in your state.