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What Is a Demand Letter?

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  • Written By: Misty Amber Brighton
  • Edited By: Michelle Arevalo
  • Last Modified Date: 08 April 2014
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A demand letter is a type of written correspondence that states a claim and makes a strong request for payment. This document could be drafted by an attorney or a debt collector. It usually states the amount of money owed, why the recipient is responsible, and the consequences that will follow if payment is not received. There is typically a deadline for a desired action to occur, normally this is around 30 days.

This legal document is usually formal and business-like in nature. It is typically written on a letterhead in full-block style, which means that all lines begin at the left margin. It normally has a formal salutation and closing. The demand letter may be signed by an attorney, if he is the one drafting this correspondence, or it could be signed by the party who has been wronged. It is usually mailed via first class postal mail in many countries, including the United States.

The first paragraph of a demand letter normally states the circumstances under which the debt occurred. It may refer to a contract or bill of sale. This is typically followed by a synopsis of the efforts taken to rectify the situation. It generally closes with a demand for payment and outlines the course of action that will be taken should the request not be met.

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In many countries, a letter of demand (LOD) must be sent before a lawsuit can be initiated. In the United States, this letter must comply with the Fair Debt Collection Practices Act (FDCPA). This means the debt collector may not threaten the debtor, use foul language, make unjustified claims, or claim to be an attorney or police officer if he is not.

When a defendant to a lawsuit is represented by legal counsel, the demand letter must be sent directly to this attorney. This means the plaintiff, or person filing the lawsuit, should not initiate this correspondence on his own. Any responses made by the defendant's lawyer should be addressed to the plaintiff's counsel as well.

A person who receives a demand letter may want to read it carefully before deciding to respond. In many instances, he might want to allow a lawyer to examine this correspondence and recommend any actions to take. He might also ask this attorney to contact the sender on his behalf, in order to reach a settlement. Doing so can often result in the situation being resolved without a court hearing.

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