Why would a debtor pay after receiving a lawyer letter?  After all, consider the case where a Toronto creditor sends invoice after invoice, letter after letter to the unpaying customer.  Why would hiring a lawyer to send a demand letter to the debtor all of a sudden change the debtor’s mind?

In truth, many times it won’t.  Some debtors simply will not pay, period and it will only take a lawsuit in the small claims court to recover the debt.

But often, a lawyer letter will help, and the reason is quite simple.  A lawyer letter shows the debtor that you are serious about enforcing your debt.   Think about it, you continue to send letters of demand to your debtor to no avail.  This is tantamount to an empty threat (1st letter – I’m going to sue you”, 2nd letter – “I really mean it this time” 3rd letter “I’m telling you I’m going to take you to the Toronto Small Claims Court if you don’t pay”….you get the idea.

The Debtor gets comfortable.  This creditor doesn’t have it in him or her to take me to court, that’s why he/she keeps sending me letters of demand.  The debtor feels like he is in the driver’s seat.   

Then the lawyer letter arrives.  The debtor receives a formal letter of demand on lawyer letterhead explaining how the debtor has failed to make payment and how the creditor will take the debtor to court in the event of a non-payment by a specified deadline. 

The debtor gets nervous.  The debtor thinks, “the creditor has retained a lawyer.  That obviously costs money.  Perhaps the creditor will sue me.  If the creditor sues me in court perhaps I will be on the hook for the creditor’s legal fees and expenses.  This can escalate.”  The debtor realizes he better pay up.

It is also important to bear in mind that often the debtor is simply lazy or does not notice your invoice amongst other invoices received.  The lawyer letter definitely stands out and gets the debtor’s attention. 

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