A demand letter is a demand on your debtor to pay all amounts owed.
Last updated on 15 November 2023
A demand letter is a demand made by the creditor on the debtor to pay all unpaid amounts owed. The creditor gives the debtor a period of time to comply with the demand. The creditor also says that if the debtor fails to comply with the demand within the given period, the creditor is prepared to pursue legal action (e.g. file a case in court).
There are no special requirements for a creditor to send a demand letter but it’s best to use a mode of service where the creditor can trace whether the debtor received the letter or not (e.g. via courier). Further, the creditor should save copies of the letter for himself / herself in case the creditor pursues legal action later on against the debtor.
You need a demand letter if you want to demand your debtor to pay the money you are owed. The creditor sending a demand letter is usually the first step in the creditor attempting to get the debtor to pay.
A demand letter is useful in the following situations:
A lawyer is not required to sign and send the demand letter. However, a lawyer’s services may be necessary if the debtor fails to comply with the demand and the creditor is forced to take legal action. In these cases, the creditor should get a lawyer’s advice on the next appropriate legal action to take.
A demand letter is an easy and cheap way for a creditor to demand the debtor to pay the money owed. Sometimes a demand letter is all that’s required for the creditor and debtor to resolve the dispute and prevent it from becoming a full-blown court case, which can be costly and lengthy.
Further, if the creditor eventually files a case in court, a demand letter shows that the creditor exerted efforts to amicably settle the matter with the debtor.
To create your demand letter, you’ll need the following minimum information:
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