Did you give a personal loan to a family member, and they haven’t paid back? Or granted a customer an IOU and they haven’t paid you for your product? How frustrating!
Thankfully, there are these letters called Letters of Demand! There is no assurance that your debt will be paid back, but at least you have a good paper trail of your demands of payment should you decide to take further legal action.
A Letter of Demand is given to a party by another party who believes they are owed a certain amount of money, and threatens to commence legal action if the debt is not paid within a period of time (usually 14 – 28 days).
Why send a Letter of Demand?
Sending a Letter of Demand warns the other party that your demand for payment of outstanding money is the final opportunity before you take the matter further. Besides being a warning, it is also cost effective, especially if the Letter of Demand is effective and payment of the debt is made.
Where the dispute goes to a tribunal or court, the letter can be used as evidence that you have taken reasonable steps to seek payment of the debt. If you are a recipient of a Letter of Demand, it is proof for your points of dispute, for example, if the claimed debt is too steep and unreasonable.
What should be included in a Letter of Demand?
It usually states the amount outstanding, and a schedule or date that amount is payable before further legal action is taken. Any relevant documents should be attached to the Letter of Demand, including any tax invoices, contracts, agreements and/or prior letters of demand to assist the other party in understanding why the debt is owed.
It is best to hand the letter of demand over in person. If that is not an option, sending by registered mail or fax is the next best option. Remember to retain a copy of the letter for your own purposes!
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