Demand Letter Guide: How to Collect Money Owed to You

Demand Letter Guide: How to Collect Money Owed to You

Before you file a lawsuit, send a demand letter. This simple document — a clear, formal written request for payment — resolves many disputes without ever setting foot in a courtroom. And if the other party still refuses to pay, your demand letter becomes important evidence that you attempted resolution in good faith.

What Is a Demand Letter?

A demand letter is a formal written notice that: 1. States the facts of the dispute (what happened, when, what was owed) 2. Makes a specific demand (a specific dollar amount, by a specific date) 3. States what you will do if the demand is not met (typically: file in small claims court, hire an attorney, or refer to collections)

It is not a legal filing. You don't need a lawyer to send one. But it IS a legally significant document.

Why Demand Letters Work

Many people and businesses ignore informal requests because they can. A formal demand letter: - Signals that you are serious about pursuing the matter legally - Creates a written record that can be used in court - Puts a deadline on the dispute that forces a decision - Gives the other party a face-saving way to pay before things escalate - Is often required before filing certain types of lawsuits

Many attorneys and financial professionals will tell you that 30–50% of demand letters result in payment without further action.

When to Use a Demand Letter

• Unpaid invoices for freelance work, consulting, or services
• Unreturned security deposits
• Unpaid loans to friends, family, or business partners
• Breach of contract claims (service not delivered, product not shipped)
• Property damage claims
• Defective products or services (seeking refund or repair)

What to Include in Your Demand Letter

1. Your Information Your name, address, and contact information at the top — this makes a professional impression and gives the other party a way to reach you.

2. The Recipient's Information Their full name, address, and any business name.

3. Date The date you are sending the letter — important for calculating deadlines.

4. Summary of Facts A factual, neutral account of what happened: - When the agreement was made (or what obligation arose) - What was agreed to or what happened - What was not paid/done/returned

Keep this section factual. Avoid emotional language. Courts respond better to "On March 15, 2026, I paid $1,200 for website development services which were not delivered" than "You stole my money and I'm furious."

5. The Demand State exactly what you want: - The exact dollar amount owed - A specific deadline to pay (7–14 days is typical) - How payment should be made (wire, check, etc.)

6. Consequences of Non-Payment State what you will do if they don't pay: - File in small claims court - Refer the debt to a collections agency - Retain legal counsel and file a civil lawsuit - Report to relevant licensing or industry boards (if applicable)

Keep this section factual and professional — threats of criminal action or "I will destroy your reputation" undermine your credibility.

7. Your Signature

Delivery Matters

Send your demand letter in a way that creates evidence of receipt: - Certified mail, return receipt requested — the gold standard; creates a proof of delivery document - Email with read receipt — faster and provides a timestamp - Both — for high-stakes matters

After You Send It

Wait the demanded period. If you receive payment — great, you're done. If you receive a reasonable counter-offer, consider whether it resolves your issue. If you receive no response or a refusal — file in small claims court, and bring your demand letter as exhibit #1.

Use iRunDocs to generate a professional, legally appropriate demand letter customized with your specific facts and a deadline for response.