To ask for your money back, put the request in writing: send a dated demand letter that names the amount owed, explains the debt, sets a payment deadline of 10 to 15 days, and warns that you will sue if the deadline passes. Mail it by Certified Mail with return receipt so you can prove the other person received it. If payment doesn’t come, small claims court is built for exactly this situation, and a judgment there gives you legal tools to collect.
The steps below walk through the full sequence, from checking that you’re still in time to sue through collecting after a court rules in your favor.
Confirm You’re Still in Time to Sue
Every state puts a time limit on how long you have to sue over an unpaid debt or broken contract, called a statute of limitations. For written contracts, that window runs from 3 years in some states to 15 years in others, with most states falling in the 4-to-6-year range. Oral agreements usually carry shorter deadlines. The clock typically starts on the date the other person missed payment or broke the agreement.
Check your deadline before you spend time on anything else. A demand letter sent after the deadline might still prompt voluntary payment, but a court will dismiss a time-barred claim, so you’d have no legal backup. One wrinkle: in some states, a partial payment or a new written acknowledgment of the debt can restart the clock, so any recent contact with the debtor may change your timeline.
Pull Together Your Proof
Before writing anything, gather every document showing what you’re owed and why. The strongest evidence falls into a few categories:
- Written agreements: signed contracts, loan documents, promissory notes, or service agreements that spell out payment terms.
- Payment records: invoices, receipts, canceled checks, or bank statements showing the money you transferred.
- Communications: text messages, emails, or letters where the other person acknowledges the debt or discusses payment.
- Product or service records: photos of defective goods, records of unfinished work, or warranty documents.
You also need the other person’s full legal name and current mailing address. A business may operate under a name that differs from its registered legal name; check your state’s business registry if you’re unsure. Getting these right matters because courts can dismiss cases where the wrong party is named or the defendant was never properly notified.
For text messages, social media conversations, or emails, take full screenshots that show the sender’s name or number, the date and time, and the complete conversation thread. Print them out. Courts generally want paper copies, and a judge isn’t going to scroll through your phone. Printed screenshots with visible timestamps also protect you if the other person later deletes the messages or claims they never sent them.
Calculate Exactly What You’re Owed
Start with the principal, the original amount, then add any charges your written agreement allows. If your contract specifies an interest rate or late-fee provision, calculate those from the date payment was due through the date of your demand letter. Without a contractual rate, most states set a default interest rate for unpaid debts that ranges from roughly 4% to 12% per year, though a few go higher. Don’t guess at an interest amount. Either calculate it from your contract’s terms or leave it out and let the court add statutory interest after judgment.
If you paid for a product covered by a written warranty and the seller failed to fix or replace it after a reasonable number of attempts, federal law may entitle you to a full refund. Under the Magnuson-Moss Warranty Act, sellers who offer written warranties cannot disclaim the basic implied promise that a product will work as expected.1Office of the Law Revision Counsel. 15 USC Ch. 50 – Consumer Product Warranties A seller offering a “full” warranty must provide either a replacement or a complete refund if the product can’t be repaired.2Federal Trade Commission. Businesspersons Guide to Federal Warranty Law You can include these warranty-related losses in your demand letter.
Write the Demand Letter
The letter doesn’t have to be long, but it needs to cover specific ground:
- Your name and contact information at the top, with your full legal name and mailing address.
- The recipient’s full legal name and address, not a nickname or trade name.
- The date, which establishes when your response deadline starts running.
- The exact amount owed, stated as a specific dollar figure, broken down into principal, interest, and fees if applicable.
- The basis for the debt, referencing the contract, invoice, loan, or transaction by date and any reference number.
- A short description of what went wrong: the missed payment, undelivered product, or broken agreement.
- A payment deadline, typically 10 to 15 days from the date of the letter.
- A statement of intent that you will file a lawsuit if the deadline passes without payment.
Keep the tone professional and factual. You’re stating what happened, what’s owed, and what you’ll do next. Nothing more. Skip emotional language and long recounts of the history between you. A judge who reads this letter later should see a calm, organized request.
What Not to Put in the Letter
Threatening to file a civil lawsuit is a standard and acceptable part of any demand letter. What crosses the line is threatening something unrelated to pressure payment, such as reporting the person to the police, exposing embarrassing personal information, or contacting their employer about unrelated matters. Coupling a demand for money with threats of criminal prosecution or public humiliation can constitute extortion, even if the underlying debt is real. Stick to civil remedies: you’ll file a lawsuit, seek a court judgment, or pursue collection through legal channels.
If you’re collecting money owed directly to you, not acting as a collection agency for someone else, the federal Fair Debt Collection Practices Act doesn’t restrict you; that law applies only to third-party debt collectors. State consumer protection laws may still limit what you can say, so avoid language that could be read as harassment, intimidation, or deception.
Mail It So You Can Prove Delivery
Send the letter through USPS Certified Mail with a return receipt. Certified Mail creates an official postal record that you sent the letter, and the return receipt (PS Form 3811) requires the recipient to sign on delivery, giving you proof they received it. As of January 2026, Certified Mail costs $5.30 per item and a hard-copy return receipt adds $4.40, bringing the total to roughly $10 to $12 including postage.3United States Postal Service. Notice 123 – Price List
Keep the mailing receipt, the tracking confirmation, and the signed green card when it comes back. In court, these documents prove you gave the other side a fair chance to pay before suing. Consider sending a second copy by regular first-class mail the same day. Regular mail can’t be refused at the door the way certified mail can, so it works as a backup if the recipient dodges certified delivery.
Handle the Response
Once the deadline arrives, you’ll be in one of three positions. Full payment resolves the matter, and you keep your records in case anything resurfaces. A counteroffer or partial payment opens a negotiation, which you can accept, decline, or counter. No response means you’ve exhausted the informal process and can move to small claims court.
Document every response you receive, by phone, email, text, or letter. If the other person admits they owe the money, even casually in a text message, that admission can be powerful evidence later.
Beware of “Payment in Full” Checks
If the debtor sends a check for less than the full amount with “payment in full” or “full and final settlement” written on it, do not deposit it without understanding the risk. Under a legal doctrine called accord and satisfaction, adopted in nearly every state through the Uniform Commercial Code, cashing a check clearly marked as full satisfaction of a disputed debt can legally settle the entire claim. You would lose the right to collect the remaining balance. If the amount owed is genuinely disputed and the check carries this language, the safest response is to return the check uncashed and insist on the correct amount.
File in Small Claims Court
If the demand letter doesn’t produce payment, small claims court is built for this situation. These courts handle money disputes without requiring a lawyer, and the process is relatively straightforward. You fill out a claim form (sometimes called a Statement of Claim or Affidavit), describe what’s owed, and pay a filing fee.
Dollar limits vary significantly by state, from as low as $2,500 in some to $25,000 in others. If your claim exceeds your state’s limit, you can file in a higher court (which usually requires a lawyer) or accept the small claims maximum and forfeit the difference. Filing fees also vary by jurisdiction and claim amount, typically ranging from $30 to $200.
After you file, the court papers must be formally delivered to the defendant, and you can’t do this yourself. A sheriff’s deputy or private process server handles it. Service fees generally run between $50 and $150, depending on the area and whether the server has to make multiple attempts. Keep the service receipt; it proves the defendant was properly notified.
At the hearing, bring every piece of evidence you’ve gathered: the original contract, your demand letter, the certified mail receipt and signed return receipt card, bank statements showing the money you sent, and any written communications where the debtor acknowledges the debt. Organize everything in chronological order so you can walk the judge through the timeline clearly. Some courts require a short mediation session before trial, which is usually free and runs 20 to 30 minutes. If mediation doesn’t resolve things, the judge hears both sides and issues a ruling, which becomes a legally binding judgment.
Collect the Money After You Win
A judgment doesn’t automatically put money in your pocket. If the debtor doesn’t pay voluntarily after the ruling, you’ll need to use legal collection tools to enforce it. The most common are wage garnishment, bank account levies, and property liens.
Wage Garnishment
Wage garnishment directs the debtor’s employer to withhold a portion of each paycheck and send it to you. Federal law caps garnishment for ordinary debts at the lesser of 25% of the debtor’s disposable earnings for that week, or the amount by which weekly disposable earnings exceed 30 times the federal minimum wage ($7.25 per hour, or $217.50 per week).4Office of the Law Revision Counsel. 15 USC 1673 – Restriction on Garnishment Some states set lower limits, meaning less money comes out of each paycheck. To start garnishment, you typically file a request with the court that issued the judgment and have the garnishment order served on the debtor’s employer.
Bank Levies and Property Liens
A bank account levy lets a sheriff or court officer freeze and seize funds directly from the debtor’s bank account to satisfy your judgment. You’ll need a writ of execution from the court, served on the bank. The debtor can claim certain exemptions (most states protect a minimum balance from seizure), so the bank may hold the funds for a period before releasing them.
If the debtor owns real estate, you can record your judgment as a lien against their property. A judgment lien attaches to the home or land and must be paid when the property is sold or refinanced. Recording it typically means filing a judgment transcript with the county recorder’s office where the property is located. Judgment liens generally remain valid for 10 years and can often be renewed.
When the Debtor Has Nothing
If the debtor has no job, no bank account, and no property, your judgment is still valid. It just can’t be collected right now. This situation is sometimes called being “judgment proof.” The judgment remains enforceable for years (the exact period depends on your state), and you can attempt collection again if the debtor’s finances change. Many states let you bring the debtor back to court periodically for an asset hearing, where they must disclose income, bank accounts, and property under oath.
Taxes on Money You Recover
When you recover money someone owed you, through a demand letter or a court judgment, the principal is generally not taxable income, because you’re getting back money that was already yours. Interest collected on top of the principal is taxable and should be reported on your tax return. If a settlement includes compensation beyond the original debt, such as damages for emotional distress or punitive damages, those amounts are typically taxable as well.5Internal Revenue Service. Tax Implications of Settlements and Judgments Keep records of how any payment breaks down between principal, interest, and other categories.