How To Demand Payment in a Letter

With all the news on television about high-profile court cases, you may think that you have to go straight to court to get any results. Court can be quite expensive, however. Many times, the best first step is to compose a well-written demand letter.

A demand letter is a document you give to the person or entity you think owes you money. In it, you explain why you are entitled to the payment and demand it. You'd be surprised how often a simple demand letter can work without you having to go to court.

This article provides information about why and how to send a demand letter to someone demanding money owed. Whether you think someone owes you money due to a breach of contract, car accident, personal injury, or some other reason, an effective demand letter may save you lots of money in potential legal fees.

Reasons for a Demand Letter

The simple reason you need a demand letter is to let the other side know that you are serious about your desire for payment. Many times, the person who owes you money thinks that you won't pursue payment from them.

Their feelings and thoughts may change after receiving a formal demand letter. A typical demand letter explains why you feel you deserve payment and often states that you plan on taking that person to court if you do not receive payment.

The demand letter is often the first time that the other party realizes that you are serious about collecting the money due to you and will take them to court if necessary. The other party may realize that if they do not pay up, they will have to spend time and money defending their position.

The demand letter may also save you from having to file formal legal action against the person you believe owes you money. Instead of suing them, the demand letter allows you to begin a negotiation process or set up a payment plan with the other person. It also shows the court that you made a good-faith attempt to resolve the issue before filing any lawsuit.

The Structure of a Demand Letter

Although every demand letter is different, this section provides a general overview of the essential aspects of a payment letter.

• Lay Out Your Reasons — The first thing you should do in a demand letter is explain what happened. This may seem strange to you because the other party should know what happened. However, it is always best to write a detailed description of the events. If you go to court, you can introduce the letter as evidence on your behalf. Keep in mind that the judge will have no idea of the circumstances. Consider including relevant times and dates and attaching relevant documents, like an invoice or photographs.
• The Golden Rule: Be Polite — You should always keep this in mind while you are writing the letter. Although you want to be firm in your letter, you do not want to anger the other party. The letter is less likely to work if you launch a written attack or insult their integrity. Instead of writing with anger, be professional. If you can, spell out what the other party stands to lose in terms of money owed, the time they would have to spend defending themselves, and the fact that the dispute would become public. The more you can show the other side that it is better to agree with the letter, the better off you will be.
• Ask For What You Want — Make sure that you include what you want in the letter. If you demand an amount of money, state the specific amount and have reasons to back it up. If you want the other party to do something (such as move their fence), list exactly what you want to happen (e.g., move the fence back by three feet).
• Be Professional — Do not handwrite a demand letter. Instead, use a computer or a typewriter. If you have your own stationary or letterhead, use it.
• Threaten an Alternative — Remember to give the other party a choice when you write a demand letter. They can either accede to your demands or prepare for a lawsuit. A typical example of an alternative is, "I'm hoping we can work this out between us. If you don't agree to the demands of this letter, I will be forced to take action against you in small claims court."

Once you have finished writing your demand letter, you should send it to the recipient via certified mail with a return receipt requested. If you receive the receipt, you know that the intended recipient received it and has notice that you expect them to pay you.

Sample Demand Letter

To see this all in practice, here is a sample demand letter:

Mail-A-Fish, Corp.

123 Example Street, Suite 101

Homer, AK 99603

April 5, 2024

Dear Mail-A-Fish,

On February 17, 2024, I purchased a whole halibut fish from your company. As advertised, you shipped the fish to me on the next business day via overnight delivery. I received it on February 18, 2024. However, during transit, the fish went rotten, and I was unable to eat it.

You advertised that you would pack any fish you shipped via overnight delivery in a cooler with at least two pounds of solid carbon dioxide (dry ice). However, my fish arrived at my doorstep packed only in a cardboard box lined with a garbage bag.

I have attempted to get a refund through your customer service department. As requested, I have also sent photographs of the rotten fish and deficient shipping materials. However, after nearly two months, I am still waiting for a refund of the $250.12 purchase price I paid.

Your customer service department states they cannot refund my purchase price because the post office did not lose the fish in transit.

I have spoken with the delivery man who delivered the fish to my doorstep. He is willing to testify that he delivered a package to my doorstep that was shipped from Alaska and had a rotten-fish smell emanating from the box. In addition, my neighbor, who was with me at the time the package was delivered, is willing to testify that she saw the return address of your company on the box before I opened it and that she also saw the rotten fish and the invoice for my purchase contained with the box from your company.

I have enclosed a copy of the invoice for my purchase. Please refund my purchase price of $250.12 to my American Express card on or before May 1, 2024. I will call American Express on May 1, 2024, to see if you refunded the purchase price. If you do not, I will file this matter with the small claims court to recover my purchase price.

If you have any questions, you can reach me at (555) 123-1234. You can also e-mail me at abcd_example@madeupemail.com.

Sincerely,

Freddy Funky

Questions About Drafting a Demand Letter? Contact an Attorney

Before filing a lawsuit, consider contacting a civil litigation attorney for legal advice and help with drafting a demand letter. An attorney can review your dispute and tell you whether you have legal grounds to file a lawsuit if the person or entity you send it to does not respond or denies your claims. You can also hire them to write a strong demand letter on your behalf, further signaling your intent to file a lawsuit if they do not pay you.