How to write a formal demand letter

A demand letter—or debt collection letter—is the first step in collecting a debt that is owed to you. Learn how to use a demand letter and what information to include in it.

by Brette Sember, J.D.
updated May 11, 2023 ·  3min read

A demand letter is a letter that explains why a person or company owes you money and formally requests that they pay it to you. A demand letter may also be referred to as a debt collection letter.

Businesswoman in glasses with long hair writing with ballpoint pen in front of laptop and coffee mug

You might need to write such a demand letter to a service person or company, such as a contractor, who took your money and then didn't do the work promised. You might also need to send a demand letter to someone who has sold you a defective product and will not accept a return. Or perhaps your small business has provided a service and a client is refusing to pay you, so you need to collect what you're owed.

Importance of a demand letter

Writing a demand letter is an important first step in legally attempting to collect money owed to you. Writing and sending the letter provides proof that you have notified the other person of this outstanding debt and have requested payment.

If you skip this step and go right to court, then the person you are seeking to collect from could claim not to have any knowledge that you're trying to collect the money. In many cases, simply writing the demand letter lets the debtor know you're serious about collecting and they will pay without your having to go to court.

What to include in a demand letter

Make sure you type your demand letter so that it is easy to read. Keep your tone polite, straightforward, and businesslike. Include the following details:

  • The date the letter is being sent
  • Your name and address, and the name and address of the debtor
  • A description of the facts of the case (such as, you signed a contract for a new roof dated X date and the contractor didn't do the work)
  • The amount you are seeking to collect (see below)
  • A date by which you are requesting payment (two weeks is normally a good time frame) and a statement that, if you do not receive payment, you will pursue legal action
  • Your signature

Specific to the amount you are seeking to collect, at a minimum, this is the amount of the debt, but you can ask for more if you have had expenses caused by this (and if so, be sure to detail how this additional amount has arisen). Asking for more money creates room for negotiation, but be aware that it might also mean the debtor will simply refuse to pay anything.

Keep several copies of the demand letter and send it certified mail, return receipt requested so you can have proof it was received by the debtor. You can write a debt collection letter yourself or you can hire an attorney to write one for you. Another option is to use an online service provider to help ensure you address all the necessary points.

10-day demand letter

A 10-day demand letter is a type of demand letter that is sent out by a collection agency on behalf of the person or company who is owed the money. It's basically the same as a demand letter, except that it states that if payment is not made within 10 days, the debt will be handled by the collection agency. Generally, collection agencies charge no fee to the person owed the debt (the person hiring the collection agency) if the debtor pays within this 10-day period. If not, then it becomes a collections matter and the agency will pursue the debt and charge fees for their work.

Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA) applies to debt collectors who attempt to collect a debt. If you as a consumer receive a demand letter from an attorney or debt collection agency, it must comply with this law, which requires that the notice must state it is an attempt to collect a debt and any information obtained will be used for that purpose. As an individual or company, if you seek to collect a debt owed to you personally, you are not required to comply with this law.

A demand letter is the first formal step in collecting a debt. It clearly lays out the amount owed and the circumstances that led to it. Sending a debt collection letter makes it clear that you are serious about collecting on the debt.

Ready to start your demand letter? START A DEMAND LETTER NOW
Brette Sember, J.D.

About the Author

Brette Sember, J.D.

Brette Sember, J.D., practiced law in New York, including divorce, mediation, family law, adoption, probate and estates,… Read more

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of the author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.