Demand Letters
Correspondence for cash
What is a demand letter?
A demand for payment is just a letter. It is not magical. It is primarily designed to allow one party to a dispute to get an attorney involved and give notice to the other party about the seriousness of the dispute. The letter may analyze the dispute and demonstrate why the person sending the letter is entitled to something.
In a legal judgment enforcement context a demand letter may include a notice of upcoming litigation, a demand for payment, an offer to compromise, and, often, some sort of a threat as to what will occur should the letter be ignored. Even after a judgment is entered there may be reasons to send a more formal demand.
Most common: pre-lawsuit demand
The most common reason a demand letter is sent is to try to resolve a dispute before a lawsuit is filed. Often these may be referred to as "cease and desist" letters: stop doing this thing before a lawsuit is filed to force you to. Or a "demand for payment" meaning something like: you owe $5,000 because of your breach of contract plus $500 in attorney fees, pay $4,500 within 30 days to avoid litigation. The specific name that is used has no legal distinction.
There are also some contexts where a pre-lawsuit letter is legally required. Certain contracts may contain a notice provision. Some laws, especially those involving lawsuits against a government, may have pre-litigation notice requirements as well.
As attorneys that have written and reviewed thousands of these types of letters, the general structure tends to be carrot and stick:
1. introduction,
2. Threats,
3. Offer.
Generally, the demands for payment should be taken seriously. Ignoring them will often lead to the threatened litigation being commenced and the next thing you receive could be a lawsuit. Also, once a lawsuit is started the costs for the Plaintiff have likely gone up, and the previous offer may no longer be available.
Post judgment demands for payment
Sometimes we may get a Court to sign off on a judgment for a client, or a client may come to us with a default judgment already obtained and want to enforce the judgment through a writ of garnishment or some other legal means. In some circumstances, it might be best to wait on collecting and, instead, send a notice and request for payment.
Some simply notice like, "Mr. Debtor, attached is a copy of the judgment in this matter. Please make arrangements to pay." From there, you wait. The reason for this approach is that on occasion the method the judgment was obtained might be technically correct, but some circumstances give rise to the possibility that the debtor would challenge it. In general, courts want a judgment to be decided "on the merits" where both sides get a chance to present their evidence. If one side fails to respond to a complaint a default judgment is proper, but there may be something that would allow the defendant to attempt to vacate the judgment under the law. By giving notice of the judgment being entered and then waiting several months. The rules for vacating a judgment often have a time requirement that starts when the debtor has knowledge of the judgment. That could be as little as a few months or as long as a year.
Important Note, this only occurs for default judgments. Meaning those judgments that are granted without the other party being present or contesting it. If there was a contested trial or hearing, then this is rarely a concern.
