A Letter of Demand is a letter that is usually drafted by a lawyer, which demands the repayment of the debt in full or for the performance of a particular obligation. This letter is usually sent after you have tried unsuccessfully to recover your debt or the amount outstanding on an invoice.
The letter of demand is used to provide notice of a party’s intention to enforce their rights, such as the recovery of debt (personal loans or when there has been a breach of a contract in a business relationship). It is also worth noting that if you anticipate that the debtor will breach an agreement or contract you can also send them a letter of demand.
It is usually one of the first steps in attempting to recover a debt, and can be used (if necessary) in court to provide evidence of a parties attempt to recover the debt prior to bringing the matter to the appropriate court.