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Does someone owe you the money you lent them, breached a contract and did not refund you, or damaged your property? You can sue to recover your money in small claims court, but consider sending a demand letter for money owed before filing your small claims lawsuit.
Common types of demand letters for money owed
Here are some examples of demand letters for money owed:
You lent someone money, but now they won’t pay you back.
Someone hit your car and you had to repair it, so now you are owed money for the costs to repair your car.
A contractor owes you money because you had to hire someone to fix the bad job they did.
Why is sending a demand letter for money owed important?
Here are some reasons why sending a demand letter for money owed before filing a lawsuit in small claims court is important:
Depending on what state you are filing a small claims court lawsuit in, you may be required to demand payment before filing. Demand letters are an effective way of completing this requirement.
They signal to the person or business receiving it that you are serious about the problem and are willing to spend time and money to get your money or property back.
When you let someone know that you intend to go to small claims court if they don't return your money, it can have a big effect on them returning your money without having to go to court.
What to include in a demand letter for money owed?
It may feel intimidating to write a demand letter, but don’t worry because we are here to help you write your demand letter for money owed.
Here are a few suggestions of what to include in your demand letter:
Include how much money you are owed. For example, how much money did you pay under contract, or how much money did you lend?
Include why you are owed money. For example, if you lent a friend money and they have not paid you back, write out when you lent them the money and what the agreement you made with them included.
Include your contact information so that the other party can reach you in case they would like to come to an agreement over the money owed with you or have follow up questions. The best way is to communicate with the other party in writing so that you can have a trail of evidence in case you need it later so an email address is one of the best contact methods.
Include where you would like to receive payment. If it is a friend that owes you money and Venmo or Paypal is the easiest way for them to pay you back, you may want to list those options. If a business owes you money, the most common way for them to pay you is via a check so you may want to consider including your address so they can mail a check to you.
Include a deadline to respond to you. You may want to consider giving the other party 7-14 days to respond to you and state that if they do not respond within that time, you intend to sue them.
Sample demand letter for money owed
Below is a sample demand letter for money owed to help you construct your own demand letter before you file a lawsuit. This template can be easily modified for your particular situation. In this example demand letter, the dispute is between two ex-roommates. Make sure your demand letter for money owed discusses your particular situation with case-specific details.
How to send a demand letter for money owed
How should I send my demand letter to the person who owes me money? It is recommended you send the letter via email or mail. For letters that you mail, consider the following:
Tracking. Make sure to track your demand letter. With tracking, you will know if the letter reached the person's mailbox.
Signature Required. You do not necessarily need a signature request. When you send a letter with the receiver's signature requested, the postal carrier must hand-deliver the letter and the person must sign for the letter. If you are sending this letter to an individual, it can be difficult for the post office to obtain the signature.
We don't recommend sending demand letters to individuals at a home address with a signature required. A signature required mailing does work better when you send the letter to a business that is open during regular delivery hours.
Once you have sent your demand letter for money owed, keep it for your records. You can bring it to the small claims court hearing and show it to the judge (especially if the person you are suing claims they didn't receive the letter).
What to do if your demand letter for money owed doesn't work
So you sent someone a demand letter and they still don't return your money or property back, now what? It is time to consider filing a lawsuit in small claims court.
Types of cases over money owed that can be filed in small claim court
So long as there isn't another court better suited to hear the case, then the lawsuit can be filed in small claims. The most common types of small claims cases in Small Claims Court for money owed are:
Your landlord owes you your security deposit.
Your tenant owes you money for unpaid rent.
Your friend owes you money for money you lent them.
Someone broke a contract with you and now they owe you money.
Someone owes you money after they hit your car.
Someone damaged your property and now they owe you money to pay for the repairs.
Chief Legal Architect & Co-Founder @ People Clerk. Camila is an attorney, consumer advocate, and certified mediator. Her passion is breaking down complicated legal processes so that people without an attorney can get justice.