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Home Personal & Family Demand Letter for Payment

Free Demand Letter for Payment

Use our Demand Letter for Payment to demand immediate payment of an overdue loan.

Updated February 21, 2023 | Legally reviewed by Brooke Davis

A Demand for Payment Letter, or Demand Letter for Payment, is a formal, written document detailing a debt owed. A Demand Letter for Payment also outlines how a payor should pay a debt and the consequences if it isn’t repaid by a specific date.

Table of Contents
  • By Type (8)
  • What Is a Demand Letter for Payment?
  • When a Demand For Payment Letter is Needed
  • The Consequences of Not Using a Demand for Payment Letter
  • Demand Letter for Payment Common Uses
  • How To Write A Demand Letter for Payment
  • Sample Demand Letter for Payment
  • Demand for Payment Letter Frequently Asked Questions

By Type (8)

Breach-of-Contract-Demand-Letter

A document used to launch breach of contract disputes against a party for violating the terms of an agreement.

Breach of Contract

refund demand letter template

A document used to request a refund in exchange for a return of a good or service.

Refund

child support demand letter

A document used to request another party to pay their fair share of child care costs.

Child Support

unpaid wages demand letter

A document used to demand immediate payment from an employer for unpaid wages.

Unpaid Wages

personal injury payment demand letter

A document used to launch settlement negotiations for the harm suffered in an accident.

Personal Injury

small claims demand letter template

A document used to file a complaint in a Small Claims court.

Small Claims/Offer of Settlement

return of personal property demand letter

A document used to request an individual or entity to return a piece of personal property.

Personal Property

response to payment demand letter

A document used to respond to a demand for payment letter sent by another party.

Response

What Is a Demand Letter for Payment?

A Demand Letter for Payment is a document that informs someone that they are indebted to an individual or company. It includes the reason for the debt and debt recovery methods and describes what happens if the recipient doesn’t reply or repay the debt before a deadline. 

In many jurisdictions, when first recovering a debt, parties first try to recover it through means other than small claims court or a lawsuit. Consider a demand for payment letter as an initial, non-confrontational approach to recovering a debt.

As a reference, people often refer to this letter by other names:

  • Letter of Demand
  • Demand Letter
  • Demand Letter for Payment
  • Final Demand For Payment

When a Demand For Payment Letter is Needed

A demand for payment letter is used when someone owes you money. Remember, every situation is fact-specific and should be approached differently. Here are some common cases where a demand for payment letter is recommended:

  1. If you aren’t paid within the time stated in the agreement, a demand for payment becomes appropriate.
  2. If you were charged for a service that wasn’t provided or a product that wasn’t delivered, you are entitled to a refund. There is no need to send a demand for payment when a simple phone call suffices. Typically, a phone call will rectify the situation when companies accidentally charge you.
  3. If you’ve contacted the company and explained the situation, they have indicated they will fix it but haven’t done so in a reasonable amount of time. In that case, a demand for payment may be appropriate.
  4. If a company refuses to credit your account and you believe it is fitting that you be credited, a demand for payment may be in order. Ultimately, it would help if you used a demand for payment letter in any case where you believe you have a legal claim regarding a debt owed.

Because your demand for payment will be used in a court claim, be polite, stick to the facts, and clarify your expectations without being unreasonable or disrespectful.

IMPORTANT

There are situations where a professional invoice template will do. For example, if you are a building contractor and have completed work as agreed, you shouldn’t send a demand for payment on the work completion date.

The Consequences of Not Using a Demand for Payment Letter

There are a couple of potential consequences for not sending a demand for payment. The first and most obvious is you may never get paid. Just as you have many things going on in your life, so too do the people that owe you money, and it’s possible they forgot about their debt. Perhaps they assumed their spouse had paid the debt. Without sending a demand letter, you may leave money on the table.

Additionally, you may not be able to proceed with a lawsuit if you have not first filed a demand for payment.

When filing a lawsuit, a plaintiff must provide a factual basis for the claim. This solid basis is often identical to the facts listed in the demand letter. Consequently, writing a demand for payment before filing a suit doesn’t create additional work. Instead, it reduces work, as often the letter will result in payment, and when it doesn’t, you already have the information you need to be reduced to writing.

Demand Letter for Payment Common Uses

The two most common situations for using a demand for payment are:

  • When someone owes you money, and
  • When someone has charged you money for something you didn’t receive (or didn’t receive as advertised).

When Someone Owes You Money

There are personal and professional situations where a demand for payment might be used when someone owes you money. For example, perhaps you lent someone money. After several months, they stopped paying on the agreed terms. A demand for payment would be appropriate in this situation. Alternatively, perhaps you provided professional services like designing a website or building a retaining wall. After sending your invoices with a due date, you hear nothing. This would be a perfect situation for using a demand for payment letter.

When Someone Charged You Money, You Don’t Owe

With the internet and automated payments, sometimes, messages get lost. You may be auto-billed for a service you didn’t receive. For example, you may subscribe to a weekly housekeeping service. If your housekeeping professional becomes ill and doesn’t find a replacement, you may have been billed by the billing service, despite not receiving the service. A polite phone call should fix this.

However, sometimes that’s not always the case, and a demand for payment letter would be appropriate. In other cases, you may have ordered something that arrived unusable. If you belong to the fruit of the month club, you expect to get fruit that is not spoiled. Or maybe you belong to a shaving club that is supposed to send razors each month. If your fruit arrives spoiled or your razors are broken, the logical first step is to contact the retailer to attempt to rectify the situation.

They could remedy the situation by sending you fresh fruit and new razors or crediting your account. If neither occurs and your contract has clearly outlined the expectations of both parties, a demand for payment may be appropriate.

Sometimes, requests for customer service are handled by employees who don’t have much power or incentive. A demand for payment may be the first time a concern is elevated from a line customer service representative to a manager or a legal team member.

How To Write A Demand Letter for Payment

Step 1 – Include Payor and Payee Information

The payor, or debtor, is the person who owes money to the payee or debtee. You must fill in both parties’ contact information in the document, such as their names and address.

You should also include the contact information of someone the payor can contact if they have questions. This individual could be the person creating the letter or related to the payee.

Specify the method of communication by listing either postal mail, phone, or email.

Step 2 – Fill in Payment Information

Write down the payment information, including information regarding the late payment:

  • Payment due amount
  • Reason for payment

    • Eg. Rent, purchase, account, etc.
  • Original payment due date
  • Number of days past due
  • Late charges

    • If late charges are attached to the late payment, specify whether the costs are a set amount or a percentage of the original payment amount.
  • Number of days the payor has upon receiving the letter to make the payment before the payee takes legal action.

Step 3 – Fill in the Final Details

Finally, date the letter and then send it to the payor.

What Should Be Included in a Demand Letter For Payment?

You should include certain fundamental information in the demand for payment letter. Such information is detailed below:

  • Party information: both the person owed the debt, and the person owing the debt, should be identified.
  • Date debt was incurred: the date the unpaid-for work was completed; or
  • Date debt was improperly charged: if the dispute surrounds a charge for services not rendered or other improper charges, the date of the charge;
  • Details of debt: facts describing the nature of the debt, including:

    • The nature of the agreement;
    • The amount agreed to; and
    • How the agreement was not followed.
  • Details of prior attempts to collect the debt: information such as calls made, emails sent, and invoices mailed;
  • Expectations for payment: expectations should be clear and definitive, including a date the payment must be made by;
  • Consequences for non-payment: if the author intends to sue if the debt isn’t paid, this should be included in the demand for payment; and
  • Signature: the author should personally sign the document

Below is a sample language often included in a demand-for-payment letter:

Party InformationFrom: Cam Contractor To: Joe Blow
Date Debt Was IncurredOn June 15, 2017, I completed the installation of your patio.
Details of DebtOur agreement was that I would install your patio for $5,000. You agreed to pay me $2500 upfront, and another $2500 upon completion. While you did, in fact, pay me $2500 up front, you have not paid me the $2500 due upon completion.
Details of Prior Attempts to Collect the DebtOn June 16, 2017, I sent you an invoice for the remaining balance of $2500, with a due date of July 15, 2017. On July 16, 2017, I sent you another invoice marked “Past Due – Please pay upon receipt.”
Expectations of PaymentI expect the balance due of $2500 to be paid within 14 days, which is August 14, 2017.
Consequences for Non-PaymentIf I do not receive payment by August 14, 2017, I will have no choice but to file a claim in small claims court for the amount due and owing, $2500, as well as any reasonable costs allowed by law.

Sample Demand Letter for Payment

Below is a sample demand for payment letter you can download in PDF or Doc format.

Demand for Payment Letter Template

Download PDF
Download Word doc

Be sure to send a demand for payment using a method that allows you to obtain proof of receipt. This can be return service requested, certified mail, or through a signature program offered by a private delivery service.

Demand for Payment Letter Frequently Asked Questions

Do I need to have the demand for payment notarized?

No. A demand for payment does not need to be notarized. However, if you file a claim in court, you may be required to swear to the truth of the allegations you make about the facts of your case. Consequently, just as with an affidavit, you should limit your demand for payment to facts. Your demand may later be admitted into evidence in a court of law.

What happens if I send a demand, and the recipient wants to negotiate payment terms?

You can negotiate payment or stand firm on your original conditions. Only you can decide which course of action is best for you. In any event, make sure to document this exchange in writing.

Related Personal Finance Documents

  • Promissory Note: Outline the details of a loan made between two people, a borrower, and a lender.
  • Loan Agreement: Enforce a promise between a lender and a borrower if one party does not hold up their end of the bargain.
  • IOU: Create an IOU form in minutes with step-by-step instructions. IOU stands for "I owe you." Record transactions with this useful legal document.
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Free Demand for Payment Letter Template

Create Your Demand Letter for Payment in Minutes!

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Demand for Payment Letter Template

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