A Demand Letter is a letter sent by certified mail to demand payment or some other action, which is in default. Essentially, a demand letter sets out why the payment or action is being claimed, how it should be carried out (e.g. payment in full, payment over time), and directions for the reply and a deadline for the reply. Demand letters are frequently used to maintain some goodwill between business parties and they often encourage payment, in order to avoid expensive litigation. Most demand letters contain the "threat" that if it is not adhered to, the next communication between the parties will be through a formal legal proceeding. LawDepot has demand letters for the following situations: debt owed, NSF cheques and stopped payment on a cheque.
Is the demand letter just a form of threat intended to compel the other side to pay up?

No, the demand letter is designed to reach a civilized solution to the financial predicament that one party has caused to the other. By pointing out that further legal action may be taken if no resolution is found, the demand letter is intended to encourage settlement rather than going to trial.

Should I keep a copy of the letter for my own records?

Yes, you should retain a copy of the letter in case further legal action is required and the recipient of the letter attempts to deny having received it.

If I do not receive a response to my demand letter, what should I do?

If your demand has been ignored or the Recipient refuses to agree to your terms in the letter, your next course of action would be to file a lawsuit.

What method of delivery should I use?

To ensure that the demand letter is received, you should use certified mail where possible.

Debt Owed
Do I need to provide documentation of the debt owed with the demand letter?

No, but providing copies of any documents you have evidencing the debt that is owed will increase the likelihood that the debtor will pay back the debt rather than letting the issue go to court.

Can I use the Debt Owed Demand Letter even if the debt isn't owed entirely to me?

Yes, you can use the Debt Owed Demand Letter, but only demand payment of the portion of the debt that is owed to you.

NSF Cheque
What does "NSF" mean?

NSF stands for not sufficient funds, and refers to a Cheque that has been drawn on an account with insufficient funds to meet the value of the Cheque, or an account which has since been closed.

If my demand is ignored, and I file suit against the writer of the Cheque, can I seek other damages?

Yes, in most jurisdictions, the Payee of a Cheque can receive up to three times the amount of the Cheque in damages, but damages are frequently limited to a maximum of $1,500.

Am I required to send a demand letter to the writer of the Cheque before filing suit against them?

No, you do not have to contact the writer of the Cheque. However, sending a demand letter is often the quickest and easiest way to collect money owed because of aN NSF Cheque.

Stop Payment
When can I use the Stop Payment Demand Letter?

Use this form of demand letter when a Cheque that was written to you was stopped by the writer of the Cheque, resulting in you not being paid what you were owed.

How much time should I give the writer of the Cheque to make payment?

Generally, there is no required time frame, but you should give the writer of the Cheque sufficient time to examine their records and determine if they have a good faith dispute over the payment that was stopped. Three to five days is usually a sufficient amount of time.

Why would I even consider accepting a lesser amount than what I am owed?

In cases where you know that the debtor will not be able to repay the entire debt in a reasonable period of time, you can offer to accept less than what you are owed to ensure that you actually recover at least part of the debt. This option is most often exercised when the creditor knows that even if they win at trial, the debtor will likely be unable to repay all the debt. You may also accept a lesser amount because you want to avoid the uncertainty of trial, you need your money right away, or your legal expenses will be high and you may get little of these costs back even if you are successful at trial.

What if the Recipient agrees to pay me?

Having the Recipient acknowledging the letter and stating that he agrees to the terms of the letter is merely an agreement to agreement. Unless you have paid some consideration or given some value such as accepting a lesser amount or accepting payment over time, the agreement to agree would not be legally binding. If you are accepting payment over time and there was some doubt as to the Recipient's liability to pay, you might want him to sign a promissory note instead. If you are accepting a lesser amount, you might want to use an Accord and Satisfaction (see LawDepot's Release Agreement).

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