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Frequently Asked Questions

What is a "Debt Owed" Demand Letter?This demand letter should be used when one or more creditors are seeking to collect a debt which is past due from one or more debtors. This letter outlines the amount of the debt, and also provides a description of the transaction creating the debt. Immediate payment of the debt can be demanded, or a settlement may be proposed to resolve the matter without involving litigation. The debtor is advised of the potential legal consequences for failing to adhere to this demand letter.What is an "Action Required" Demand Letter?This demand letter should be used when one or more people require a certain action be performed by one or more people. This letter outlines the action to be performed by the receipients of this letter. Documentation may be provided to explain and backup this demand. The recipients of this letter are advised of the potential legal consequences for failing to adhere to this demand letter.What is an "Insurance Claim" Demand Letter?This demand letter should be used when an accident victim is trying to reach a settlement with an insurance company. The letter outlines the claim information, including details of the incident such as injuries and expenses. It also asks for a final settlement amount within a specified deadline in exchange for the victim's right to sue. It advises the insurer that if they do not reach a settlement, the claimant will pursue their claim in court.What is an "NSF cheque" Demand Letter?This demand letter should be used when a cheque written by a debtor is returned by the debtor's bank due to insufficient funds or the account being closed. This letter outlines the cheque details (number, date and payment amount) and explains why the bank returned the cheque. The debtor is advised to pay the amount of the cheque plus bank and mailing costs, in order to avoid legal proceedings.What is a "Stop Payment" Demand Letter?This demand letter should be used when a person owing money to a creditor makes payment in the form of a cheque, but then later instructs the bank to stop the cheque. The creditor can use this demand letter to secure payment of the debt, plus bank and mailing fees. This letter advises the debtor of the legal consequences for failing to adhere to this demand letter. It also urges the debtor to resolve the debt with the creditor, if the debtor believes he/she has a good faith dispute.

Your Demand Letter

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_________________________
___________________________________
___________________________________

August 30th, 2016

____________________
___________________________________
___________________________________

Dear Sir:

You were to have paid the amount of  $_______CAD (the "Debt") to me on August 30, 2016 and this Debt remains outstanding despite my requests for payment. The Debt relates to:
___________________________________________________________
___________________________________________________________.

For your reference I have enclosed a copy of ____________________.

Without prejudice to my rights for full recovery of the Debt, I am prepared to accept the amount of $_______CAD as full and final settlement of the Debt if paid within _______ days from the date of this letter.

Please note that if I have to commence legal proceedings in order to secure repayment of the debt owing, this letter will be tendered in court as evidence of your failure to attempt to resolve this matter. Further, you may be liable for any court costs, attorney fees and damages, including punitive damages.

You might want to contact a lawyer to discuss your legal rights and responsibilities.

Yours sincerely,

___________________________
_________________________

enclosure

Demand Letter Information

Alternate Names:

A Demand Letter is also known as:

  • Payment Demand Letter
  • Letter of Demand
  • LOD

What is a Demand Letter?

A Demand Letter is used by one party to request an action or payment from another party. It is a way for the parties to reach a peaceful resolution before taking the next step and settling the issue in court.

What is Included in a Demand Letter?

A Letter of Demand outlines the reason or situation for sending the letter, including why the demander is making the claim, how the recipient can respond, and when they must respond. It also includes a warning of further legal action if the request is not carried out by the deadline.

While you don't have to provide documentation that supports your request, it helps to increase the likelihood of the recipient performing the action or repaying the debt outlined in the letter.

What Can I Use a Demand Letter For?

You can use LawDepot's Demand Letter for:

  • Debts: A creditor can request outstanding payment from a debtor.
  • Action: A demander can request that a recipient performs an action.
  • Insurance Claim: An injured party can request that the insurance company provide a final settlement.
  • NSF Cheque: If a debtor's cheque bounces (insufficient funds), a creditor can request payment.
  • Stop Payment: When a debtor makes a payment to a creditor, but later cancels the cheque with the bank, a creditor can use this LOD to secure payment for the debt and encourage the debtor to resolve any dispute.

How Do I Write a Demand Letter?

You should stick to the facts when writing a Demand Letter. By nature, an LOD can be threatening, which is why it's important to remain clear and polite. If you're using an LOD for any of the above scenarios, include the following elements in your letter:

  • What you are demanding and why you're sending the letter (e.g. The borrower defaulted on a payment of $1,000.00 due on the first of the month as per the contract, violating our written agreement)
  • How to perform the action (e.g. Deliver the payment to the lender's address)
  • Instructions for how and when to respond (e.g. In person or by registered mail before the first of August)
  • The type of documentation attached to the LOD, such as an invoice or contract, to support the assertions (e.g. A copy of the original Loan Agreement dated June 1)
  • Settlement terms or whether you will accept a lesser payment (e.g. The creditor will accept a lesser payment of $700.00 by August 1)
  • Consequences for not following instructions laid out in the Demand Letter (e.g. If you fail to respond to this letter, I will commence legal action and use this letter as proof of your failure to resolve this matter)

How Do I Deliver a Demand Letter?

You can deliver a Demand Letter to the receiver yourself or enlist a lawyer, friend, or family member to deliver it on your behalf. You should always make a copy of the letter before delivering it. To ensure the letter is received if you cannot hand-deliver it, consider sending it by registered mail.

Why Should I Use a Demand Letter?

A Letter of Demand is used to request action, payment, or another legal obligation. It gives the recipient a chance to fulfill the request before being taken to court over the matter. Sending a Demand Letter is an attempt to express goodwill and reach a resolution as soon as possible to avoid expensive and time-consuming litigation.

What Happens After I Send a Demand Letter?

After you deliver the LOD to the recipient, you may or may not receive a response by the deadline. The recipient might carry out your demands and settle the claim, negotiate the demands, or ignore your letter entirely. Your next step will depend on the response you receive.

You might consider following up to ensure they have received your LOD, or pursue legal action and file a complaint. If you are unsure how to proceed, consult with an attorney about your next course of action.

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