When to Send a Demand Letter vs. Sue in Small Claims

Unsure of when to send a demand letter versus sue in small claims court?

Summary of this article: Generally, sending a demand letter before suing is encouraged as you may resolve your dispute cheaper and faster. Moreover, in some states, you are required to send a demand letter before suing in small claims court. 

A demand letter is a written request you send to the other person (or company) who has caused you harm or owes you money. It usually includes:

1. A clear statement of what happened. For example, “I hired you to fix my roof, and you never finished the job.”

2. The amount of money or action you want. For example, “I would like a refund of $500” or “Please pay for the cost to finish the roof repair.”

3. A deadline. You let them know how soon you want them to pay or fix the problem. For example, “Please respond within 14 days.”

A demand letter is often the first step to trying to resolve a dispute without going to court. It is a polite but firm notice telling the other side what you want, why you think they should give it to you, and how to reach you.

1. When it is required by law in your state or for your type of dispute. In some states, or for certain types of disputes, you must formally demand payment with a demand letter before you can file a lawsuit. While some states only require that you make a demand in writing (like texts or emails), sending a formal demand letter is the clearest way to prove that you made this demand.

2. You want to avoid court if possible. Courts can be stressful, time-consuming, and costly. A demand letter might help the other person realize they should settle the matter peacefully.

3. You think the other person might pay or fix the problem once they see you are serious. Sometimes, people just need a formal reminder or proof of their mistake.

A demand letter can be very effective in convincing the other party to work out a solution. It will likely be taken more seriously when:

1. You have a legal claim. If you can show that the facts and the law are on your side, the other party is more likely to pay attention.

2. You have solid evidence. Photos, receipts, contracts, and witnesses can make your case stronger.

3. You could harm the company’s reputation. If the business believes ignoring you might look bad in public, they may want to fix the problem quickly.

4. It helps you organize your case. Writing a demand letter forces you to clearly explain what happened, what you want, and why you deserve it.

5. It signals you are serious. A well-written letter shows that you’re ready to take the next step if they refuse to cooperate.

6. It creates a record of your attempt to settle. If you do go to court, you can show the judge that you tried to solve the matter on your own.

7. It may lead to a settlement without going to court. The biggest reason to send a demand letter is the chance to end the dispute without a lawsuit.

Sometimes, sending a demand letter isn’t enough. If the other person ignores you or refuses to fix the problem, you may decide to file a lawsuit in small claims court. Reasons to do so include:

1. No response or refusal after your letter. If they never answer or say they won’t pay.

2. Expiring Time limits (statute of limitations). You don’t want to lose your right to sue by waiting too long.

3. They only respond with excuses. If they refuse to settle in good faith, a judge may be your best hope of getting a fair outcome.

Small claims court is designed to be simpler and faster than other courts. Here’s what to expect:

1. Filing a claim. You fill out paperwork at the courthouse (or sometimes online), pay a small fee, and list the amount of money you are seeking.

2. Court hearing. A judge (or sometimes a magistrate) will listen to both sides. You should bring any evidence (like receipts, photos, or contracts) that supports your case.

3. Judge’s decision. If you win, the court will give you a judgment saying the other person owes you money or must take certain actions.

A demand letter is a powerful and sometimes legally required tool that can help you solve a problem without going to court. It explains what you want, why you want it, and gives the other person a chance to fix the issue. If they ignore your letter or refuse to help, filing a lawsuit in small claims court may be the next step. Always keep track of important deadlines, save copies of all letters and evidence, and do your best to solve the problem early. By following these steps, you’ll have a better chance of protecting your rights and reaching a fair resolution.