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Coloradoan · Jul 17, 2009, 11:13 AM

I hold a promissory note from a small company. The note is due, and I verbally asked for the company to pay the note. They said they cannot afford to, but I know they absolutely can, without injury to the business, because I know the book keeper. What do I say in a letter to them that I want the note paid? Do I simply say that the note is due and I "demand" it's immediate payment, or are their more correct terms to use? Thank you.

morgaine300 · Jul 17, 2009, 11:25 PM

I would first of all not take what the bookkeeper says as gospel. That person may not have enough knowledge of the company to know whether making this payment is possible or would injure the company. And if I were the bookkeeper and someone over my head had chosen not to make a payment, I wouldn't be making such comments to someone we owed a bill to.

The money is due you. You can take it all the way to court if you want to. But I would start with a "short & sweet" letter, and use the word "request" rather than "demand." That is, start nice, with a less threatening and intimidating tone. Just make a point that the note is due, with details about any number it might have, what the principle was, interest, maturity, all that nice stuff, so that it's all down there in writing. Be all "understanding" about the hard economic times and whatnot, and that they should at least contact you within x days to discuss the matter. i.e. a first letter should be more of a "reminder" and you can also offer to make some type of arrangements, blah, blah.

Each subsequent letter can get more serious and use a bit stronger language, including the fact that x attempts have been made to contact the person, it's getting "seriously overdue" and such. And you can still be understanding, but that you don't understand why contact would not at least be made (assuming it hasn't). I think I'd be leary of the word "demand." Though you can certainly mention that you will "take necessary steps" to collect the note.

This is a (real) sample of a "first" collection letter, when it's still being fairly nice:
After conducting an audit of our accounts receivable, we have found that you have a past due balance of xxxx. We request you send this amount withint 15 days of receipt of this letter to the address listed above. If you are unable to pay the entire balance at this time, please call our billing office at xxxx to set up a mutually agreeable arrangement. We appreciate [your business] and look forward to having this matter resolved promptly.

I've worked at a lot of small companies that were late with payments, so I've seen a lot of these letters. :rolleyes:

ScottGem · Jul 18, 2009, 04:32 AM

This is simple:

Pursuant to the Note you signed <insert date> agreeing to pay <insert amount> on or before <insert due date>, I am requesting payment as per the terms of the Note. Please remit immediately or I will be forced to take further action.

Give them a week to respond. If they don't respond or pay, then send a second letter stating that their failure to abide by the terms of the note has forced you to take legal action and then file a suit against them.

Coloradoan · Jul 18, 2009, 08:01 AM

Thank you both very much!

excon · Jul 18, 2009, 08:15 AM

Hello C:

Even though you didn't ask this part, I thought I'd throw in my 2 cents...

If you're note is for less than $10,000 I would sue in small claims court even if the maximum you can sue for is much less... I'd do it because it's quick, cheap and easy. If you sue in superior court, it's NOT quick. It's NOT cheap and it definitely ain't easy. Plus you'll probably have to pay an attorney, and if you win, you probably won't get any more than if you sued in small claims court to begin with.

Ok. That's my 2 cents. Later.

excon

Coloradoan · Jul 18, 2009, 08:30 AM

Good to know! Thank you. (I hope it doesn't get to that).

morgaine300 · Jul 20, 2009, 11:34 PM

I hope it doesn't get to that either. I've never seen any place file in court that quickly and I think giving them a week is a bit of a rush. (If someone told me that, I'd think it was an empty threat.) Do please try to work this out with them first.

ScottGem · Jul 21, 2009, 04:28 AM

Originally Posted by morgaine300

I hope it doesn't get to that either. I've never seen any place file in court that quickly and I think giving them a week is a bit of a rush. (If someone told me that, I'd think it was an empty threat.) Do please try to work this out with them first.

It does not take long to file a lawsuit, especially in small claims court. It can take a very long time for the suit to be heard. If you read my suggestion carefully, the first letter does not threaten anything more than "further action". The second letter does not mention any time frame. The second letter is merely a statement that the OP will be filing a law suit.

Remember also that the OP has already asked for the money and been refused. So I see no reason for being overly polite by requesting the money. He has a note, the debtor has reneged on that not, and then refused to pay. The OP now has to get more forceful.