How to Respond to a Demand Letter

You receive a demand letter when someone to whom you owe money wants to collect that money and plans to take further action against you if you don't pay that money soon. You want to respond to a demand letter to give yourself the best-possible footing with the situation.

Instructions

Difficulty: Moderately Challenging

1. Write the creditor back in a letter of your own if you don't believe you actually owe the money, if there is a mistake or if something is unclear. Make a copy of the letter and keep for your records. You may wish to send the letter via certified mail to verify that the creditor received the letter.
2. Call the creditor and find out more information about the demand letter. Find out what they plan to do if you do not pay the debt, and by what date they expect payment.
3. Negotiate with the creditor for a better price. Your creditor is probably glad to hear from you. They don't want to go through the motions of court proceedings if they can get their money from you in another way. Negotiate the debt. Many creditors are more than willing to accept a percentage of what you owe them if you simply agree to pay them or get on a payment plan with them.
4. Construct a letter to the creditor notifying them of your inability to pay the debt if you are unable to pay them back at all. If you are in the process of filing bankruptcy, notify the creditor of that as well.
5. Be polite in your response to a demand letter. Remember that the creditor is sending you the demand letter because they either want the money or plan on taking the issue to court.