Filed Under (Small Claims) on 06-27-2013
After you have determined that your case is appropriate for Small Claims Court—there is damage or loss, someone is liable, and the amount of the claim does not exceed $7,500—you are ready to proceed to court. Your first task is to lay the ground work for a successful outcome in court. One of the most effective ways to begin is to send the other party a letter outlining your version of the events in the case and asking for payment. This correspondence, sent by you directly to the other party without any court involvement, is usually called a demand letter.
The demand letter serves three important purposes.
1. It helps you focus on the relevant aspects of the case before you initiate a court action. Writing a demand letter compels you to examine the facts in the case and determine the extent of the damage or loss, who is liable, and whether you want to pursue the case. A demand letter provides a good vehicle for clarifying what you intend to accomplish by filing an action.
2. Serves to alert the other party to the fact that you believe he or she owes you money, without escalating the matter to the level of litigation. The other party is made aware of your seriousness as well. Sometimes, though not often, sending a demand letter will actually result in your receiving payment for your claim without the need for a formal court action.
3. Usually the best reason to send a demand letter prior to commencement of a court action is to create a history of the case—from your perspective. The letter should state how you perceive the chronology of events so far, and how you perceive the event, bargain, or transaction that is the basis for your claim. To this extent, the real audience for your demand letter is the judge, not the other party. You want to create a document that clearly sets out what has happened for the benefit of someone who has never heard of you or the other party and is totally unfamiliar with your dispute. This type of letter is especially important in a situation involving an oral contract, because it may be the only written account of the transaction.
For more tips on composing an effective demand letter, check out “Winning Big in Colorado Small Claims Court: How to Sue and Collect” by Charles P. Brackney, Esq.