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Demand Letter For Payment Form PDF Free Download
What Is a Demand Letter for Payment?
A Demand Letter for Payment is a document that informs someone that they are indebted to an individual or company.
It includes the reason for there being a debt, methods of debt recovery, and describes what happens if the recipient doesn’t reply or repay the debt before a deadline.
In many jurisdictions, when first recovering a debt, parties first try to recover it through means other than small claims court or a lawsuit.
Think of a demand for payment letter as an initial, non-confrontational approach to recovering a debt.
As a reference, people often refer to this letter by other names:
Letter of Demand
Demand Letter for Payment
Final Demand For Payment
When a Demand For Payment Letter is Needed
A demand for payment letter is used when someone owes you money.
Remember, every situation is fact-specific and should be approached differently.
Here are some common cases where a demand for payment letter is recommended:
If you aren’t paid within the time stated in the agreement, a demand for payment becomes appropriate.
If you were charged for a service that wasn’t provided or a product that wasn’t delivered, you are entitled to a refund.
There is no need to send a demand for payment when a simple phone call suffices.
Typically, when companies accidentally charge you, a phone call will rectify the situation.
If you’ve contacted the company and explained the situation, and they have indicated they will fix it but haven’t done so in a reasonable amount of time.
In that case, a demand for payment may be appropriate.
If a company refuses to credit your account and you believe it is fitting that you be credited, a demand for payment may be in order.
Ultimately, it would help if you used a demand for payment letter in any case where you believe you have a legal claim regarding a debt owed.
Because your demand for payment will be used in a court claim, be polite, stick to the facts, and clarify your expectations without being unreasonable or disrespectful.
How to Send a Demand Letter for Payment
Sending a demand letter for payment involves gathering evidence of the money owed, writing the letter (preferably typed), and sending it via Certified Mail with Return Receipt so that there is an official docket of the defendant (“debtor”) receiving the notice.
Step 1 – Gathering Evidence of Debt
Gathering evidence to add attachments or exhibits to the demand letter helps show the debtor owes the money.
Whether it’s by a contract, they signed a receipt for goods sold or service provided or any other proof.
Step 2 – Writing the Demand Letter
When writing the demand letter, it’s best to think of the strategy beforehand and what the “threat” or “incentive” should be to motivate the debtor.
The most popular ways to entice a debtor to pay are the following:
Collection Agency – Individuals that care about their credit report know that if a debt goes to a collection agency it will affect their credit.
Therefore, letting the debtor know this may motivate the debtor to at least respond.
Discount – A business or individual will occasionally offer a discount or “1-time offer” if the debt is paid by a certain date.
Businesses will mark down commonly up to 50% in order to get the debt settled.
Instalment Payments – Offering the debtor a payment plan is often a route that is best for young individuals living paycheck to paycheck.
Small Claims – If the debt is applicable (See State Maximums), threatening to go to Small Claims Court should make the debtor feel uncomfortable.
If the debtor owns the property a lien may be placed on their property with an official judgment against them.
After attempting to entice the debtor to settle the debt in any way possible, the closing of the letter should include all available contact methods (e.g. phone, e-mail, website, etc.).
Step 3 – Sending in the Mail
When sending the demand letter in the mail, it’s best to use the United States Postal Service’s Certified Mail with a Return Receipt.
Find USPS Locations
The term “certified mail” is trademarked by the United States Postal Service (USPS) and is required by the sender to inform the debtor of the money owed.
The option “return receipt” means the sender will receive a log from the USPS stating when the letter was delivered and who accepted it (with their printed name and signature).
This return receipt may be used in court to prove the debtor received sufficient notice before filing the case.
Step 4 – Commence Legal Proceedings
If there is no response by the debtor, there is no other choice but to advance legal proceedings or elect to hire someone else to attempt to collect the debt.
The creditor has the following options:
Forward the Debt to a Collection Agency – Ideal for businesses with many debtors.
The costs of hiring an attorney and filing legal proceedings for every debtor a business has may outweigh the actual benefit.
Therefore, teaming up with a collection agency that is a professional in this area may be better and the only payment is when they collect, typically 25% to 50% of the amounts collected.
Small Claims Court – This is a cost-effective route for an individual seeking an amount that is lower than their State-mandated maximum amount for Small Claims.
This commonly does not require an attorney and the cases are “fast-tracked” often being able to get a court date within 30 days.
District/Superior Court – For amounts higher than the maximum amount provided by the State’s Small Claims Court and required hiring an attorney and obtaining sound legal advice.
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Demand Letter For Payment Form PDF Free Download