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.

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