Demand Letter


DEFINITION of 'Demand Letter'

A letter sent to a debtor requesting payment. A demand letter is often written by a lawyer in order to ensure professionalism and compliance with law. Generally, a demand letter is not sent until payment is far overdue. A demand letter is often preceded by phone calls and other more amicable attempts to remind a debtor of the obligation.

BREAKING DOWN 'Demand Letter'

In the U.S., some demand letters may fall under the purview of the Fair Debt Collection Practices Act (FDCPA) or may be subject to state laws. These laws outline rules which must be followed in debt collection, and allows a debtor to seek damages if these rules are not followed. Thus, legal counsel is often involved in attempting to collect seriously overdue debts.

  1. Credit Rating

    An assessment of the credit worthiness of a borrower in general ...
  2. Fair Debt Collection Practices ...

    A Federal law that limits the behavior and actions of debt collectors ...
  3. Engagement Letter

    A written agreement to perform services in exchange for compensation. ...
  4. Creditor

    An entity (person or institution) that extends credit by giving ...
  5. Default

    1. The failure to promptly pay interest or principal when due. ...
  6. Debtor

    A company or individual who owes money. If the debt is in the ...
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