MAKE YOUR FREE Demand for Money Owed

If you’re making a Demand for Money Owed letter, then you might have to familiarize yourself with the Fair Debt Collection Practices Act. It governs the collection of "consumer debt" (defined to include any personal, family, or household debt) by the following types of "Debt Collectors": 

1. Any person in the business of collecting debts. 
2. Any creditor who collects debts using a name other than his or her own. 
3. Anyone who collects or tries to collect debts for another person.

The Act does not apply to individuals, banks, or businesses that collect their own debts using their own names. However, if there is any doubt about whether the Fair Debt Collection Practices Act applies, consult an attorney. This general overview of the scope of the Fair Debt Collection Practices Act is only a rough description and is not a substitute for competent legal advice. 

Collecting money for others 

If this letter is being prepared to collect money owed to someone else, you should consult a lawyer to determine whether or not you qualify for one of the exceptions under the Fair Debt Collection Practices Act and whether you satisfy your state's requirements for debt collection. 

Non-compliance with the Fair Debt Collection Practices Act 

If a debt collector does not comply with the Fair Debt Collection Practices Act, the debtor may sue the debt collector within one year after the violation. It may be possible for the debtor to recover actual damages plus additional damages up to $1,000, court costs, and reasonable lawyer's fees. 

Contacting the debtor 

A debt collector cannot do the following: 

• Contact the debtor before 8 a.m. or after 9 p.m. 
• Contact the debtor at unusual places. 
• Contact the debtor at the place of employment if it is known that the employer prohibits such contact. 
• Harass or abuse the debtor. This includes, but is not limited to: 
  • Using or threatening violence or harm to the person, the person's reputation, or property. 
  • Using obscene language. 
  • Publicizing the debt. 
  • Making annoying, repetitive, or anonymous phone calls. 
  • Providing false or misleading information as to the collector's identity. 
  • Collecting an additional fee not authorized by law or by the terms of the debt agreement. 
  • Charging the debtor with collect calls or telegram fees. 
  • Communicating by postcard.
• During a period when the debt is being verified, the collector may not ask for payment.

A debt collector may not contact a person other than the debtor except for the purpose of locating the debtor. In doing so, the debt collector must do the following: 

• Identify himself or herself. 
• Not reveal the consumer's debt. 
• Not use a postcard or any other means that might reveal the debt-collection activity. 
• Not contact the person more than once unless absolutely necessary. 
• If the debt collector learns the identity of a lawyer who is representing the debtor, all future contact must be with that lawyer.

Following up with written correspondence 

Within five days after contacting a debtor, the debt collector must send a written letter that includes the following information: 

• The amount of the debt. 
• The name of the creditor. 
• Notice that the debt will be assumed to be valid unless disputed within 30 days. 
• Notice that if the debt is disputed, the debt collector will verify the debt and send a copy of supporting documents to the debtor.

For most small business owners, it’s important to remember that the Fair Debt Collection Practices Act does not apply to individuals, banks, or businesses that collect their own debts using their own names. For small businesses and individuals, often sending a Demand for Money Owed letter can be an effective tool to get paid what you are owed. But if you still have questions or concerns about violating debt collection laws, don’t hesitate to ask a lawyer.