What should I put in a formal letter to the debtor demanding payment?

Question

What should I put in a formal letter to the debtor demanding payment?

Answer

One of the first ways of recovering business debt is by writing a demand letter.   A “demand letter” is one written to a debtor by the individual who is owed money.   The letter should contain some very specific points.   First of all, in the beginning you should outline the facts relating to what the debtor owes you and why he/she owes the money.  

Secondly, the demand letter will address what steps which need to be taken to satisfy the debt.   It should state specifically by what date the debt must be paid.   If you are willing to accept payment arrangements, that should also be stated in this section of the letter; and should include the dates those periodic payments must be made.

Thirdly, the dates should again be stated; when the debt must be paid; and/or, when a payment arrangement must be agreed to.   This section should also include by what date the debtor must respond to the letter.

Lastly, the letter must clearly state the consequences of not paying, agreeing to payments, or responding to the demand letter.   You should clearly state here that you will take the case to court and file a lawsuit if the debtor does not respond or make full payment.

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