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Things you need to know about Demand Letter for Money Owed.


1. What is a demand letter?

A demand letter is a formal demand on your debtor to pay all due and unpaid amounts owed. The letter gives the debtor a period of time to voluntarily comply with the demand. The letter also states that if the debtor fails to comply within the given period, the creditor is prepared to pursue appropriate legal remedies (i.e. file a complaint in court).

There are no special legal requirements to send a demand letter but it’s best to use a mode of service where you can trace whether it was received or not (i.e. via courier). Further, it’s advisable for you to save copies of the letter for yourself in case legal action is pursued later on. 


2. When do you need a demand letter?

The demand letter should be used if you want demand payment of money owed. It is usually used when a person who is owed money has made repeated demands to be paid and has been ignored. Generally, it is unnecessary to send a demand letter before beginning judicial proceedings for payment of money. However, sending a demand letter is usually the first step in attempting to getting paid. 

A demand letter is useful in the following instances:

  • When a person loaned money and the loan remains unpaid
  • When a person advanced payment on behalf of another person and is yet to be reimbursed
  • When a person sold goods, or provided services and is yet to be paid

While a lawyer is not required to sign and send the demand letter, a lawyer’s services will be necessary if the debtor fails to comply with the demand letter and the creditor is forced to take legal action. In such cases, the creditor should seek a lawyer’s advice on the next appropriate legal action to take.


3. How can a demand letter protect you?

A demand letter is an easy and cheap way of demanding the debtor to pay the money owed. Sometimes a letter is all that’s required to resolve the dispute and prevent it from becoming a full-blown court case, which can be both costly and lengthy for everyone involved. 

Further, if a case is eventually filed in court, a demand letter shows that you exerted earnest efforts to amicably settle the matter. You gave the debtor an opportunity to voluntarily comply with your demands.


4. What information do you need to create the demand letter?

To create your demand letter, you’ll need the following minimum information:

  1. The name of the creditor and details (i.e. address, contact details)
  2. The name of the debtor and details (i.e. address)
  3. A brief description of the reason the debtor owes money
  4. The total amount owed
  5. The period given to the debtor to voluntarily comply with the demand letter before taking legal action

5. How much is the document?

The document costs PhP 350 for a one-time purchase.

You can also avail of Premium subscription at PhP 1,000 and get (a) unlimited use of our growing library of documents, from affidavits to contracts; and (b) unlimited use of our “Ask an Attorney” service which lets you consult an expert lawyer anytime for any legal concern you have.

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