Demand for Payment

A Demand for Payment is a formal request issued by a creditor (or their representative) to a debtor, asking for payment of an outstanding debt. This demand typically occurs after an invoice has gone unpaid or when an agreement has been breached. The document outlines the amount owed, provides a deadline for payment, and often includes a warning of potential legal action if the payment is not received.

• Late Payments: If an invoice has not been paid by its due date.
• Breach of Contract: When one party fails to fulfill their financial obligations under a contract.
• Loan Defaults: When a borrower fails to make agreed-upon payments on a loan.

1. Debtor and Creditor Information: The names and addresses of both parties involved.
2. Description of Debt: Details of the debt, including the original invoice or contract, the amount owed, and the due date.
3. Payment Terms: A clear statement of the amount due, along with any late fees or interest charges.
4. Payment Deadline: A specific date by which payment must be made.
5. Consequences of Non-Payment: A warning that legal action may be taken if the debtor fails to comply.

A demand for payment is often a preliminary step before pursuing legal action, such as filing a lawsuit or sending the matter to collections. In some cases, it can also serve as proof that the creditor made a reasonable attempt to collect the debt before escalating the issue.

Currently we have the following documents for use: 

– Demand for payment of a promissory note. The holder of the note has presented the note for payment, and the note has not yet been paid. This document puts the maker on notice of payment. 

– Demand Payment on Guarantee – A guarantor promises to pay a debt when the original debtor fails to do so. This is a demand for the guarantor to pay – as the primary obligor has defaulted. 

– Demand Possession of Collateral – This demands possession of collateral (property, equipment, etc.) that has been posted as security for a loan. This provides the lender with “security” in the event of non-payment. The lender can sell the collateral to recover their money. 

– Demand Payment from Endorsers – An endorser of a note or draft instrument (a promise to pay – ex. a promissory note) signs the commercial notes in some capacity. This generally provides a warranty concerning the terms of payment. If those terms are not met, the endorser may be liable on the note.