Demand Letter

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  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. Debtor

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

    1. The failure to promptly pay interest or principal when due. ...
Related Articles
  1. Bankruptcy Protection For Your Accounts
    Retirement

    Bankruptcy Protection For Your Accounts

  2. Digging Out Of Personal Debt
    Credit & Loans

    Digging Out Of Personal Debt

  3. When You Can't Pay Uncle Sam
    Options & Futures

    When You Can't Pay Uncle Sam

  4. What You Need To Know About Bankruptcy
    Retirement

    What You Need To Know About Bankruptcy

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center