Demand Letter — Unpaid Debt
A formal demand letter requesting payment of an outstanding debt, setting out the amount owed and a deadline for payment.
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A demand letter for an unpaid debt is a formal written communication from a creditor to a debtor requesting payment of money owed, setting out the amount, the basis of the debt, and a deadline for payment before further action is taken. A demand letter is typically the final step before initiating legal proceedings and demonstrates to a court that the creditor made a reasonable attempt to resolve the matter without litigation.
Why it matters
Sending a demand letter serves several purposes: it gives the debtor a final opportunity to pay without the cost and inconvenience of court; it creates a written record of the debt and the demand; it may restart the limitation period in some provinces; and it signals seriousness that often prompts payment. Many small claims matters are resolved after a well-drafted demand letter is received.
What it should include
The letter should clearly state: the identity of the creditor and debtor; the amount owed; the basis of the debt (contract, services rendered, loan, NSF cheque, etc.); supporting documentation (invoice, agreement, receipts); a specific payment deadline (typically 10 to 14 days); the consequences of non-payment (small claims court, reporting to credit bureau); and the creditor's contact information and preferred payment method.