So you contracted with someone and they didn’t hold up their end of the deal. Or maybe you lent someone money and they haven’t paid it back. Whatever the reason, this person or company owes you money, but you’re not getting it.
You’ve tried all the nice ways of approaching them about this– you’ve texted, you’ve emailed, you’ve asked your mutual friend if they’re ignoring your calls. But at this point, you need to demonstrate that you’re serious, so you decide it’s time to break out the payment demand letter.
Before you break out the computer, though, there are a few things you should know about payment demand letters, what they can and can’t accomplish, and why you should usually consult a business attorney like our team at Generations Law Group before drafting.
Below are five things to consider before sending one.
What is a payment demand letter?
A payment demand letter is a formal document, usually written with the assistance of an attorney, that outlines your legal claim and demands payment or completion of contracted services.
A payment demand letter will usually contain some combination of the following:
- An explanation of what is owed and why
- Proof of previous attempts at restitution that went unanswered or unfulfilled
- Your official demand for restitution and a timeline for when it should be fulfilled
- What you plan to do if they do not comply with your demand (for example, a lawsuit)
Five things to consider before sending a demand letter
1. Demand letters do not guarantee compliance.
Demand letters can be useful as evidence in court in the event that you are forced to file a lawsuit to recover the payment or services that are owed to you. However, that’s about the extent of their power– just because you send someone a formal letter demanding something, it doesn’t necessarily mean they’re going to be any more inclined to comply.
2. A demand letter can be used against you if a legal battle ensues.
It’s important to be careful with the wording of your letter. If you’re overly aggressive or threatening, or if you demand an unreasonable amount of money, it can sway opinion against you. In addition, you want to make sure you’re not waiving any legal rights or admitting some fact that would hurt your case. This is one of the reasons an experienced attorney’s input can be crucial in the drafting of a demand letter.
3. You do not need to provide every single fact or piece of evidence about your case in a demand letter.
It can be tempting to lay it all out in your letter, but in reality the person or company you’re sending this letter to is likely already aware of the situation. You’ll have time to make your case in court if they don’t comply. The most important thing to do now is to make your demands clear and explain what you plan to do if your demands are not met.
4. An attorney is not required to send your demand letter.
In most cases, the recipient of your letter is likely to take it a bit more seriously if it has an attorney’s letterhead at the top. But there’s no rule that an attorney has to be involved for your demand letter to be taken seriously. Any formal letter of notice, whether it’s delivered digitally or through the Postal Service, will show the court that you’ve done your due diligence in informing the person or company of what’s expected from them.
5. There are legal limitations on how one can pursue a debt.
Unfortunately, this isn’t the Wild West, and you can’t send a bounty hunter after someone just because they owe you money. While a demand letter can be a useful tool, you may need to consider other options, whether that’s filing a lawsuit or involving a debt collection company. It’s important to talk to an experienced business attorney about what options are open to you, and what options aren’t.
Hire a business attorney at Generations Law Group today
If you are looking to send a demand letter to collect a debt or nonpayment for your business, our office can help. Generations Law Group attorneys have assisted our clients in obtaining repayment and know what it takes to craft a successful demand letter and avoid exposing your business to additional legal risk. Contact us today to schedule an appointment.