How to Write a Demand Letter for Money Owed

Why Send a Demand Letter for Money Owed

When someone owes you money and won't pay, a formal demand letter is often the most effective first step. Here's why:

It Creates a Paper Trail
A written demand establishes exactly when you requested payment, what you asked for, and gives the debtor a clear deadline.

It Shows You're Serious
Many debtors ignore informal requests. A formal letter signals you're prepared to take legal action.

It's Required in Many Cases
Some courts require you to send a demand letter before filing suit. Even when not required, judges look favorably on plaintiffs who attempted to resolve matters first.

It Often Works
Many disputes are resolved after receiving a well-written demand letter. The debtor may have forgotten, may be waiting to see if you're serious, or may simply need a formal request to authorize payment.

What to Include

Your demand letter for money owed should include:

1. The Exact Amount Owed
Break it down if there are multiple components:

• Original amount: $X


• Interest (if applicable): $X


• Late fees (if contractually allowed): $X


• Total: $X

3. What You've Already Done
"I have sent three invoices and made two phone calls attempting to collect this debt."

4. Any Contract or Agreement
Reference the contract, invoice, or agreement that establishes the debt. Include a copy if helpful.

5. A Specific Deadline
"Please remit payment in full by [DATE], which is 14 days from the date of this letter."

6. Payment Instructions
Make it easy to pay you. Include your mailing address, and offer other payment methods if you accept them.

7. Consequences
"If I do not receive payment by [DATE], I will file a claim in small claims court and pursue all available legal remedies, including recovery of court costs and attorney's fees where permitted by law."

Sample Language

Here's example language you can adapt:

Opening:
"This letter serves as a formal demand for payment of $[AMOUNT] that you owe me for [REASON]."

Establishing the Debt:
"On [DATE], I provided [SERVICES/GOODS] as agreed. Despite our agreement that payment was due [TERMS], I have not received payment."

Previous Attempts:
"I have previously attempted to collect this debt by [PHONE/EMAIL/INVOICE] on [DATES], without success."

The Demand:
"I hereby demand payment in full of $[AMOUNT] within [14/30] days of the date of this letter."

Consequences:
"If I do not receive payment by [DEADLINE DATE], I will pursue legal action, which may include filing a lawsuit in small claims court and seeking recovery of additional court costs and fees."

What NOT to Do

Don't Threaten Criminal Action
Unless the debt involves actual fraud, threatening to call the police or have someone arrested is inappropriate and may be illegal.

Don't Harass
One letter is usually enough. Sending multiple letters per week crosses into harassment.

Don't Inflate the Amount
Only claim what you're actually owed. Inflating the amount can get your entire claim thrown out.

Don't Make False Statements
Everything in your letter should be accurate and verifiable.

Don't Accept Partial Payment Without a Plan
If they offer partial payment, get a written agreement about when the rest will be paid.