How to Write a Payment Demand Letter

Last Updated: April 21, 2025 References

Formatting Your Letter

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Drafting the Body of Your Letter

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Sending Your Letter

Whether someone hasn't repaid money you loaned, or you're trying to get your money back for an unsatisfactory product or service, you may be contemplating suing that person in small claims court to win a legal judgment for the money. However, many small claims courts require you to first send the person a demand letter asking for payment. Even if the court where you file your claim doesn't require proof that a payment demand letter was sent, you typically will have to explain to the judge why you didn't formally demand payment from the person before you sued him or her. To write a payment demand letter, lay out all the facts of the dispute in a polite, professional manner and ask for payment of the specific amount you are owed. ^{[1]
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Part 1

Part 1 of 3:

Formatting Your Letter

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Use traditional business letter format. A formal demand letter should be typed and sent on paper, rather than using email or sending a handwritten note, neither of which provide the same degree of seriousness and gravity. ^{[3]
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- Most word processing applications have a business letter template that you can use. If you have letterhead paper or stationery, you may want to use that as well.
- Use a standard, legible font such as Helvetica or Times New Roman, and make sure your pages are set for one-inch margins on all sides (more at the top if you need to make room for letterhead).
- The body of your letter typically is single spaced, with a double space between paragraphs. The double-space between paragraphs indicates a block style, which means paragraphs themselves usually aren't indented.
2
Get correct contact information. You must have the correct name and mailing address of the person from whom you're demanding money. if the situation escalates to the point that you have to file a lawsuit, you'll need this information so you know where to have the complaint served. ^{[5]
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- If you're sending the letter to another individual, finding his or her address may be relatively easy. However, if you're sending the letter to a business owner, you may want to check the state business registry at the website of your state's secretary of state to get the correct legal business name and address.
- You'll need this information anyway if you end up filing a small claims suit, so you might as well get it ahead of time and send your letter to the correct party.
- The name and address of the person to whom you're sending the letter should be typed single-spaced on the left-hand side of the page, typically immediately under the date of the letter.
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3
Include your own contact information. There's no point in sending a payment demand letter without providing multiple ways for the person to get in contact with you and send you the money he or she owes. ^{[7]
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- Your own name and address typically are typed above the name and address of the person to whom you're sending the letter, and are right-justified. Your word processing application's business letter template should format your text this way automatically.
- If you are using letterhead that includes your name, address, and other contact information, you typically don't have to create a duplicate block with the same information.
- In addition to including your name and address at the top of your letter, you probably also want to include the same information in the last paragraph, as well as alternative means of getting in touch with you such as a phone number or an email address.
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Part 2

Part 2 of 3:

Drafting the Body of Your Letter

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Describe the dispute. Begin your letter by providing a summary of what happened, and the specific reason you are writing and demanding payment. Include as many facts and specific details of the incident as you have. ^{[9]
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- Tell the story of the dispute chronologically, sticking to facts rather than your opinion as to what happened or any speculation as to what the other person was thinking or why the incident took place.
- This is your opportunity to lay out the incident that gave rise to the dispute as clearly as possible. In the event you file a small claims lawsuit, these facts will become the statement of your case against the person who owes you money.
- If you dealt with employees of the person to whom you're writing your letter, include their names if you know them. If you don't, simply refer to them by their roles or job titles rather than attempting physical descriptions, which can be faulty and lapse into subjective assessments that may be inaccurate.
- Maintain a polite and professional tone, and avoid insulting or talking down to the person. Keep in mind that if you end up filing a complaint in small claims, this letter likely will be read by the judge.
2
List prior collection efforts. If you've previously talked with the person, or one of his or her employees, include a brief account of those conversations, and how they led to your decision to write this formal demand letter. ^{[12]
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- A big part of the reason to include this information is to preserve a written account of what has transpired after the initial incident leading up to the moment you decided you needed to take further action to collect the money.
- Including this information sets the stage for a lawsuit should you have to file one, by summarizing the efforts you have made to collect the money prior to going to small claims.
- This summary also may help impress upon the person to whom you're writing the letter the seriousness of the situation and the efforts you've made to pursue payment.
- As with your description of the initial incident, keep your account brief and stick to the facts, including as many specific details as possible.
3
Make your demand. Start a new paragraph and make a direct and specific demand for the amount of money you are owed. Let the person know if you are open to negotiation or willing to consider a settlement, but avoid providing any specifics about the range of money you are willing to accept. ^{[14]
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- Depending on the situation, you may need to provide a brief calculation to show how you arrived at the amount you believe is due. For example, if the person borrowed $200 from you, and has made two payments of $25 and one payment of $10, you might acknowledge the three payments (and the dates they were received), and conclude that the person owes you $140, or $200 minus $60 worth of payments made.
- If you are open to payments in kind of some other solution other than payment of money, you should mention that as well. For example, if you are asking for your money back from a mechanic who failed to properly repair your car, you may be open to the mechanic's offer to fix your car, or provide other services in the future in lieu of a full refund.
4
Set a deadline. Provide a reasonable amount of time for the person to get back to you and resolve the situation, and explain what will happen if you don't hear from the person or receive the money you are owed within that time period. ^{[16]
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- A good deadline typically is a week to 10 days from the date the letter is received. If you send the letter using certified mail with return receipt requested, you will receive a notice in the mail when the person has received your letter, and you can mark the due date on your calendar.
- State that if you don't hear anything from the person by that deadline, you will file a lawsuit in small claims court to recover the amount of money he or she owes you.
- You also may want to remind the person that a court judgment will appear on his or her credit report, and may negatively impact his or her credit score.
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Part 3

Part 3 of 3:

Sending Your Letter

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Finalize your letter. Once you've finished drafting your letter, check it carefully to ensure there are no typos or errors in grammar and punctuation, and that it will print properly. ^{[18]
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- You also may want to edit your letter for length, particularly if it is more than two pages long. Although there's no rule that specifies how long your letter should be, it shouldn't be any longer than is necessary to tell your story.
- Make sure your descriptions are as concise as possible, and clearly state the facts of the incident and the demand you are making as a result.
- When you're satisfied that your letter says everything you want to say and is error-free, print it up and sign it using blue or black ink.
2
Make copies of your letter. Before you mail your letter to the person, make at least one copy of the signed letter so you have it for your records. File it together with any other documents such as receipts that are related to the dispute. ^{[20]
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- The file that you create should include everything related to the particular dispute. This way if you do end up having to file a complaint in small claims court, you will already have all the information you need together in one place.
- If there are any supporting documents such as receipts, invoices, or cancelled checks that you want to include with your letter, make copies of them to enclose – don't send your originals.
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Mail your letter. Send the original, signed copy of the letter using certified mail with returned receipt requested, so you will be notified when your letter is received. ^{[22]
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- Keep all your mailing receipts and notices in the same file with your copies of your letter and other documents or notes related to the dispute.
- Any other correspondence with the person who owes you money also should be included in this file. If the person calls you, take notes during the conversation.
- Immediately after the phone call, type up a summary of the discussion and send the person a letter confirming what was discussed. State in that letter that unless you hear otherwise by a specified date, you will assume that your summary of the conversation is accurate.
- While you're waiting for a response, you may want to go ahead and get a complaint form for the small claims court in your county. Most courts make these forms available online, or you can stop by the clerk's office in the courthouse and pick one up.
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How to Write a Payment Demand Letter

Steps

Formatting Your Letter

Drafting the Body of Your Letter

Sending Your Letter

Expert Q&A

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