If an individual is owed money, and the borrower shows no signs of repaying it, one of the first steps they should take is to send a demand letter. This is a formal letter that clearly states the circumstances for the loan, the required repayment and a suggestion that taking the issue to court may be an option if the debt is not repaid.
The letter will demonstrate to the borrower that the lender is serious about wanting their money and it will also serve as evidence if the case needs to go to court. This letter could be the first step in the legal process of recovering debt.
In many cases, especially between individuals, a demand letters are all it takes to remind the borrower that they need to pay their debts. A demand letter may also need to be sent to an employer who has not paid promised wages.
Demand letters can be sent for other purposes than financial debt. If a neighbor has put a fence on the other person’s property, or in some way destroyed their property and not paid for repairs, a demand letter can be sent to ask them to move the fence or pay for the damages.
Demand letters should be polite and not harass the debtor especially if it is going to a family member or friend of the lender. They will most probably need to maintain a friendly relationship with the borrower.
This is why the letter should simply state the facts and not have an emotional tone. If the case needs to go to court, any harassment on the part of the lender will not be viewed favorably.
The letter can be firm, but polite with no angry expressions or insults aimed at the borrower. These could act as a deterrent for the borrower to repay the loan.
Appearance of the Letter
The appearance of the letter ought to be formal but personal and not resemble an official document in any way. If the lender has personal stationery, that should be used.
The letter should be sent by registered mail, so the lender has proof of sending and receiving. It could also be sent by fax if there is a confirmation of receipt.
These receipts should be kept. Copies of any contracts, letters of agreement, receipts or invoices that are connected to the loan should be attached to the demand letter.
A clear description of the situation should be stated in the beginning of the letter. Next the letter should state exactly what the borrower wants.
If the letter is to get a loan repaid, the lender should state a specific amount of money and give a reasonable due date when they expect the amount to be paid. At this point, it can be stated that if the demands aren’t met, the lender will take the next step and go to court.
Sample Demand Letter for Payment
Lender’s phone number
Lender’s email address
Dear Mr/Ms Recipient’s Name,
This letter is in regards to a loan that I made to you in the amount of $500 on DATE for the down payment of your new car. At that time, we agreed that this loan was to be paid in full by DATE. As of today, DATE, you have not given me any payments towards this loan. It has been one year since the loan was to be repaid in full. I request that, on the receipt of this letter, you repay the amount in full.
If I do not receive payment in full before the end of this year, I reserve the right to take further legal action to recover the amount of the loan without further notice to you. This letter may be given in evidence in court of your failure to pay. If it becomes necessary to go to court, I will expect you to pay the applicable interest, filing and attorney’s fees, and any other related costs.
I will be happy to answer any questions you may have if you call me at 555-1234.
Your immediate attention to this matter will be appreciated.
List any attachments
By Andre Bradley