Yes, Letters of Demand can be quite effective in a number of situations for you to recover money owed to you.
It may be that the debtor will have simply and legitimately misplaced the details for the account owing and upon receiving your letter of demand for the debt owed, the debtor may be prompted to either pay you or contact you to negotiate. A second scenario is that a letter sent to a debtor that threatens court again will ‘scare’ them into paying you the debt owed to avoid going to court.
When sending a letter of demand, there are a number of items that should be included and will be beneficial should you have to take legal action against a debtor at a later time. First the letter should outline the amount owed and state that more formal legal action will be brought if you are not paid, which advises them of the consequences. Accompanying the letter should be a copy of any contract or receipt evidencing where and how the debt was accrued as well as copies of any and all former requests for payment.
This letter of demand should be sent to the debtor by registered post. By sending the letter by registered post, you as the creditor will then have evidence of the debtors’ receipt of the letter, proof of their knowledge of the debt and can show that you have attempted to settle the debt before bringing legal action.
Send a Letter of Demand first …
Conversely, if legal action is commenced without first sending a letter of demand, the debtor may claim they had no knowledge of the amount owed and the court may tell both parties to attempt to settle the dispute amongst themselves before the court will consider making any order.
Despite the content of a letter of demand being authoritative in nature, it is also facilitative in the sense that it may assist to prompt settlement of the debt without the need for the court to step in, even if settlement is paying part of the amount owed to you.
In summary, letters of demand can be effective in some instances for settlement out of court, being used as a last demand for payment of a debt owed to you. The letters are an essential step should the dispute go to court. If the dispute goes on to court, the letter and any attached evidence may be entered to show that there has been an attempt to settle the dispute.
In many jurisdictions it is an easy process to represent one’s self in a small claims court. By having your letter with a registered post receipt in this scenario to claim your debt in court, a debtor will have a big hurdle in explaining why they should not pay a debt and did not contact the creditor or make any attempt to settle prior to wasting court time.
We’ve written an extremely easy-to-use Letter of Demand template. There are online video instructions, that take you step-by-step through the template, plus answers to FAQs. Get the Legal123: