While the thought of debt collecting is clearly an unpleasant endeavor, and indeed, nobody wants to be reminded of it (!), it is important to understand the process behind enforcing on an outstanding debt.  This article attempts to clarify that process.

You Loan Money and Get Screwed Over

So you loaned Bob $20,000 and he’s not paying you back.    What you have is a bad debt.  You are sort of on the fence as to whether or not to pursue a court action.  After all, going to court can cost you upwards of $10,000, and with all the stress of litigating and no guarantee of success at the end of it, who needs it?

Sending the Lawyer Letter

The first thing to do is to send Bob a lawyer letter, or often referred to as a “demand letter”, “letter of demand” or “7 day letter”.  Essentially, the lawyer letter is a letter on intimidating lawyer letterhead demanding that Bob pay you back your debt within a set deadline, usually 7 days or more.    

Can A Lawyer Letter Work To Get My Money Back?

Lawyer letters have been proven to be successful time and again.  See this letter from a satisfied Toronto journalist as just one example.  However, the beauty of the lawyer letter is that it’s “Without Prejudice”, meaning that the contents of the demand letter cannot be used against you at any time.  So, if you decide to send the letter, and ultimately you don’t get paid and decide to simply write off the debt as bad debt, your letter cannot come back to haunt you in any way, shape or form.  Of course, if you do wish to sue, we refer you off to a competent lawyer or paralegal – it’s your choice – and you’re off to the races. Regardless, for just a small, flat fee (or sometimes on contingency) the lawyer letter is virtually risk free, and if you do get paid, it’s a very worthwhile investment. 

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