Last Updated on February 11, 2021
One of the unfortunate side effects of having a business where people pay you for your services is that you have to get paid for your business to function. Many people are not extremely reliable about paying their debts, and this is as true with individuals and their credit cards as it is with corporations and $100,000 loans.
Regardless of your business size, unless you are 100% cash, you will eventually have a customer or client who doesn’t pay. There is legal recourse, but it always starts with a properly drafted demand letter.
Demand Letters Come Before Legal Action
Whether you are owed seventy-five dollars and want to go to small claims court, or plan to file a $100,000 lawsuit, you must start with a demand letter. A properly structured demand letter might get you paid with no further action.
Even if your demand letter doesn’t get you your payment, it will be integral in your later court filings. Without a properly delivered and filed demand letter, your claim will be immediately thrown out of court.
There are a few key elements to a good demand letter. Your letter should start with a clear description of any back story relevant to the claim.
This isn’t a life story of every interaction you ever had with the person you are seeking money from. All you need to include are the basic parameters of what led to them owing you.
After you have made it clear how the debt was acquired, define how much is owed. If payment in full is all you will accept, then that is all you need to include, but if there are other acceptable remedies that you would take, include that information as well.
As a final element, you should include a demand date. This is the deadline to meet one of your remedies before you will file the claim. When you send the demand letter, send a copy to the clerk of the court to file for potential legal actions.
Some Rules to Keep in Mind
There are some etiquette guidelines for demand letters. Since this will potentially be evidence in your court case, you need to follow these guidelines as closely as possible.
1. Keep It Cordial
While the business of sending or receiving a demand letter is inherently unpleasant, be certain that you don’t become unpleasant. Don’t be too verbose in your letter.
Getting angry or threatening in your letter can backfire. Any verbiage that could be interpreted as a threat can get you in trouble when the letter arrives in court.
Don’t get angry while writing your letter, as that will likely filter into what you write. Remain calm, and present your facts as clearly and emotionlessly as possible.
2. Keep it Brief
It is very important that you include all of the relevant information in the backstory, but avoid irrelevant details. Don’t make your synopsis any longer than necessary, so the information that is needed can be found. Don’t use very tough vocabulary while writing the letter, keep it simple and brief so the person can understand your letter easily and take good action.
3. Avoid Insults
Few things will backfire faster in front of a judge than a bullying demand letter. Regardless of how low your opinion of the recipient of your letter, putting those opinions in your demand letter makes it much less likely that you will get your money from them, and it reflects poorly on you when it is time to go to court. Don’t write any type of abusive language in your letter this will make the judge uncomfortable and very less chance to take strict action against that person.
In summary, a demand letter is a way to make clear exactly who owes how much, and what they can do to resolve the debt. A deadline for payment makes sure that they either pay you or know that their case is going to court. You make sure that you have not been verbally abused by the person who owes you money this will make your case simpler and more chance to get your money back.