DEMAND LETTER

demand letter

A letter usually from a lawyer on behalf of a client that makes a demand for payment or some other action which is in default. Under the Bankruptcy and insolvency Act, a financial institution before it takes any action must give demand and notice of intention if it intends to enforce its security and must wait 10 days before it can enforce its security by, say, the appointment of a Receiver or Agent. (Dictionary of Canadian Bankruptcy Terms)

United Glossary of Bankruptcy Terms2012.

In the U.S., some demand letters may fall under the purview of the Fair Debt Collection Practices Act (FDCPA) or may be subject to state laws. These laws outline rules which must be followed in debt collection, and allows a debtor to seek damages if these rules are not followed. Thus, legal counsel is often involved in attempting to collect seriously overdue debts.