Payment Demand Letter
▣ Important Tip
While you're demanding something that's your legal right, insure that you're not too harsh. Don’t attack the other party personally or blow things out of proportion. You always have the option of filing a lawsuit. Inform your client of a specific end date for your warning, after which you'll be forced to take legal action against him/her.
A payment demand letter is the best option to ask debtors to repay loans. Demand letters are written if debtors are consistently ignoring your reminders for repayment of loan or refuse to discuss the case in any manner. These letters are supposed to bring initiation in successful negotiation of monetary disputes. Therefore, firms and individuals write these letters to clients or individual debtors in hope of an easier settlement of overdue debts. Here is how a standard demand letter must be worded.
Colorado State Bank of Loans
Liberty Centre, Freewill Street,
Little Spring, Colorado
Date: August 6, 2012
Ms. Becky Luke
18, Crystal Towers
4th Avenue, Little Spring,
This letter is being served to you as a last legal notice for defaulting your loan repayment for the sum of $10000, which was advanced to you by us as on June 1, 2012.
The amount of debt has been overdue since July 1, 2012. You've already been issued two reminders for completing your repayment procedures on July 10, 2012 and July 25, 2012 respectively. We're holding copies of acknowledgements signed by yourself for receipt of these reminders.
As per the late payment clause in the loan agreement signed by you, you now owe us $10800, which is inclusive of the principal amount and late payment interest. If this amount isn't received in a period of 5 days beginning from the date of this letter, we shall be forced to exercise our rights and take a full-fledged legal action against you to recover the overdue amount, accrued interest and legal expenses borne by us in this case.
We expect a quick response from you in this matter.
Ms. Valerie Jones
Colorado State Bank
Helpful Ideas for Writing
✎ Payment demand letters should be printed on letterheads, if they're written by an organisation. In all other cases, they can be printed on personal letter stationery.
✎ Avoid handwritten letters. Send typed/printed letters only. Make sure you keep records of the sent copy with yourself for future reference.
✎ Start the letter by mentioning the date. It acts as an important proof, if you need to sue your debtor.
✎ Follow this by mentioning the complete name and address of your debtor.
✎ Writing subject lines isn't mandatory. In case you wish to write one, then you may write ‘Letter for demanding loan repayment’. ‘Final reminder for Loan repayment’.
✎ The salutations of this letter can either be ‘Dear sir/madam’. ‘Dear Mr./Ms. (last name)’.
✎ Make a reference to the date of loan issuance, the original date of repayment. The dates of previously issued reminders for repayment of the loan.
✎ You can ask for specific amounts of money in installments on fixed dates, to ease the pressure on borrower. Be flexible. Insure your interests don't get compromised.
✎ End the letter with ‘Sincerely’, followed by the name, signature and position of the writer or authorized person.
It generally happens that people/clients who owe you money don’t pay much heed to your words if you just request them or try to contact them on their phone numbers. However, once you write a letter, the intensity of your warning increases. The threat of legal action in case the client fails to return your money makes him aware of the possibility of any legal action. A demand letter has very often been successful and it's certainly a wise thing to do before one prepares to file a lawsuit against the person not returning the money.