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Frequently Asked Questions

What is a "Debt Owed" Demand Letter?This demand letter should be used when one or more creditors are seeking to collect a debt which is past due from one or more debtors. This letter outlines the amount of the debt, and also provides a description of the transaction creating the debt. Immediate payment of the debt can be demanded, or a settlement may be proposed to resolve the matter without involving litigation. The debtor is advised of the potential legal consequences for failing to adhere to this demand letter.What is an "Action Required" Demand Letter?This demand letter should be used when one or more people require a certain action be performed by one or more people. This letter outlines the action to be performed by the receipients of this letter. Documentation may be provided to explain and backup this demand. The recipients of this letter are advised of the potential legal consequences for failing to adhere to this demand letter.What is an "Insurance Claim" Demand Letter?This demand letter should be used when an accident victim is trying to reach a settlement with an insurance company. The letter outlines the claim information, including details of the incident such as injuries and expenses. It also asks for a final settlement amount within a specified deadline in exchange for the victim's right to sue. It advises the insurer that if they do not reach a settlement, the claimant will pursue their claim in court.What is an "NSF check" Demand Letter?This demand letter should be used when a check written by a debtor is returned by the debtor's bank due to insufficient funds or the account being closed. This letter outlines the check details (number, date and payment amount) and explains why the bank returned the check. The debtor is advised to pay the amount of the check plus bank and mailing costs, in order to avoid legal proceedings.What is a "Stop Payment" Demand Letter?This demand letter should be used when a person owing money to a creditor makes payment in the form of a check, but then later instructs the bank to stop the check. The creditor can use this demand letter to secure payment of the debt, plus bank and mailing fees. This letter advises the debtor of the legal consequences for failing to adhere to this demand letter. It also urges the debtor to resolve the debt with the creditor, if the debtor believes he/she has a good faith dispute.

Your Demand Letter

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_________________________
___________________________________
___________________________________

December 4th, 2016

____________________
___________________________________
___________________________________

Dear Sir:

You were to have paid the amount of  $_______USD (the "Debt") to me on December 4, 2016 and this Debt remains outstanding despite my requests for payment. The Debt relates to:
___________________________________________________________
___________________________________________________________.

For your reference I have enclosed a copy of ____________________.

Without prejudice to my rights for full recovery of the Debt, I am prepared to accept the amount of $_______USD as full and final settlement of the Debt if paid within _______ days from the date of this letter.

Please note that if I have to commence legal proceedings in order to secure repayment of the debt owing, this letter will be tendered in court as evidence of your failure to attempt to resolve this matter. Further, you may be liable for any court costs, attorney fees and damages, including punitive damages.

You might want to contact a lawyer to discuss your legal rights and responsibilities.

Yours sincerely,

___________________________
_________________________

enclosure

Demand Letter

Alternate Names:

A Demand Letter is also known as:

  • Letter of Demand
  • LOD
  • Collection Letter

What is a Demand Letter?

A Demand Letter is a formal notice that requests payment or action from an individual or a business. Demand Letters are generally used to resolve a dispute outside of court, with the aim of coming to a quick resolution and saving money on legal fees.

When Should I Use a Demand Letter?

LawDepot's Demand Letter can be used in the following situations:

  • To request payment of a debt which is past due
  • To request an action, such as asking a contractor to redo their work
  • To reach a settlement with an insurance company after an accident
  • To secure payment after a debtor's check is returned by the bank due to insufficient funds or a closed account
  • To secure payment after a debtor stops payment on a check and you were not paid

What to Include in a Demand Letter:

A letter of demand contains specific information based on why it is being written. In general, an LOD states the purpose for writing the letter, requests payment or action by a certain date, and threatens legal action if there is no response. Any relevant documentation should also be attached.

Here's what to include in specific types of Demand Letters:

Debt Owed

A letter requesting a debt repayment should outline the reason for the debt, the amount, and the original due date. If the creditor wishes to settle for a lesser sum, the letter should also provide the terms of settlement, including the amount and the payment due date.

Action Required

This letter should include a description of the action being requested, such as completing a task or providing a service.

Insurance Claim

A letter to an insurance company should provide the claim number, date of the incident, and details of the accident, including injuries and hospital expenses. The letter should also include the settlement amount and a deadline to respond.

NSF (Not Sufficient Funds) Check

A letter requesting payment after a debtor's check is returned should include information about the check, including the payment amount, name of the bank, and check number. You can also request reimbursement for bank fees and postage costs.

Stop Payment

A letter requesting payment after a debtor puts a stop payment on the check should include the check amount and number, date of issue, and name of the bank. The letter can also demand compensation for bank fees and postage costs.

How to Send a Demand Letter:

You can ensure that your LOD gets into the hands of the recipient by:

  • Delivering it by hand
  • Hiring a lawyer to deliver it on your behalf
  • Having a trusted friend or family member deliver it on your behalf
  • Sending it by registered mail, which offers proof of delivery

What is a Settlement?

When a debt hasn't been paid on time, it's often because the debtor is unable to pay in full or within a reasonable period. If that is the case, the creditor can offer a settlement in their debt collection letter.

Settling means accepting less than what the debtor initially borrowed, so that you recover at least a portion of the debt. Considering the cost of litigation, it may be worth your while to settle rather than take legal action to recover your money.

Responses to Expect from a Demand Letter:

The threat of legal action contained in a Demand Letter may be enough to prompt payment or action from the recipient. As a result, you may be able to get what you asked for right away.

The recipient may also respond with a counter-offer. You can accept the offer if you want a quick resolution and the terms are agreeable to you. Otherwise, you can refuse or continue to negotiate.

In contrast, the recipient may ignore your letter. If you do not receive a response by the due date, you can contact the recipient to ensure the letter was received, send a second letter, or commence legal proceedings. If you're uncertain about what to do next, consider speaking with a lawyer.

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