Demand for repayment of debt: calculation and sending to the debtor

The money was handed over under a loan agreement or an IOU, the repayment deadline has passed, and the debtor does not respond or keeps making promises. At such a moment it is important not just to call and remind them, but to put a written demand for repayment of debt with a calculation in place. This is not a formality: whether you can later recover the amount through court and not lose interest and penalty depends on how the document is drafted and how it is delivered.

Mistakes in a demand for repayment of debt are constantly encountered: there is no calculation, the deadline is stated incorrectly, the document is sent in such a way that the debtor can claim they received nothing. Fixing this after filing a claim is harder than doing it right from the start. Below is a practical analysis: when a demand is needed, what it must contain, how to calculate the debt and how to send the document so that it becomes evidence.

When a calculation of the debt is needed together with a demand for repayment of debt

When the debt is confirmed by an IOU or a loan agreement, a written demand for repayment of debt is the first step of pre-trial settlement. But if the document contains only the phrase "repay the debt", the debtor sees the amount, does not understand how it was arrived at, and does not react: neither payment nor objections. For the demand to work, a calculation of the debt is attached to it.

A calculation is a table showing how the amount was arrived at for each ground: the date of issue, the amount of the loan, the repayment term, the period of delay. Without such a calculation, a demand for repayment of debt turns into a formal letter, and the dispute goes to court with the risk of the amount being challenged.

The calculation helps the debtor see the figures and either pay or raise objections.

Demand for repayment of a loan: what the document should contain

The document begins with the details of the parties: the full name and address of the lender, the full name, address and, if available, IIN of the borrower. This is followed by the ground — the loan agreement or receipt with the date and amount — as well as the amount of the principal debt, interest and penalty, indicating the period for which they are calculated. Be sure to state the deadline for performance: a specific date or the number of days from receipt of the letter, and the payment details if the money is transferred by bank transfer.

The demand for repayment of a loan ends with the lender's signature and the date; if a representative is acting, a power of attorney is required. The calculation is attached as a separate document so that, in the event of a dispute, it is clear how each figure was arrived at.

The main blocks of the demand:

• Parties: full name, address, IIN if available
• Ground and amount of the principal debt
• Interest and penalty with the accrual period
• Deadline for performance and payment details
• Signature, date, and a power of attorney if required

The calculation is provided as a separate annex to the demand.

Demand for the return of funds under a loan agreement

A demand for the return of money under a loan agreement relies on written confirmation that the money was transferred: a receipt, a payment order or a receipt slip. If there is an agreement but the money was handed over without a document, it is harder for the court to establish the fact of the loan — in that case the demand is supported by correspondence, audio recordings and account statements. Send the document to the debtor's address stated in the agreement: if the debtor does not live there, sending it to the known address still records an attempt to follow the pre-trial procedure.

The method of sending directly affects its evidentiary weight. A registered letter with an inventory of contents and an acknowledgement of receipt makes it possible to confirm that the debtor received the demand, while courier delivery with a note confirms that the document was handed over in person. Sending by email is suitable as additional evidence if such an address is stated in the agreement.

How to prepare a debt calculation for the demand

Take the figures for the calculation from the agreement and payment documents: the loan amount or the contract price, the date the money was transferred, the payment schedule, the agreed interest rate. Calculate interest using the simple interest formula for each day of use: the debt amount multiplied by the rate and by the number of days, divided by the number of days in the year. Calculate the penalty at the rate set by the agreement or by law, separately from the principal debt and interest.

Unless the agreement provides otherwise, partial payments are applied first to the costs of recovery, then to the remuneration, and only then to the principal debt, so keep a chronology in the calculation: date, amount, balance. The final figure is tied to a specific date — the day the demand is drawn up; without it, the debtor and the court will not understand as at what date the amounts were calculated. Include in the calculation:

• the period of delay for each payment;
• the formula and interest rate;
• the procedure for offsetting partial payments;
• the total amount of the debt, interest and penalty.

Mistakes in a debt repayment demand that hinder recovery

The most costly mistake is an amount in the demand that cannot be substantiated. Penalties and fines are included in the calculation "by eye", without references to a clause of the contract or the law, and sometimes a penalty is simply invented that does not exist in the agreement. The debtor gets a trump card: in court such an amount will be reduced, and the unreasonableness of the demand will undermine trust in the other figures.

The second mistake is a calculation divorced from the contract: the amounts are not tied to specific clauses, and it is not stated what the principal debt, interest and penalty consist of. The demand is sent to the wrong addressee — to an old address or in the name of a person who is not a party to the transaction. And when there is no confirmation of sending, it is almost impossible to prove that the debtor even received the document. A few simple rules help to avoid this:

• Calculate the amount only according to the terms of the contract or the law, with written references
• Check the address: use the one stated in the contract and in up-to-date data on the debtor
• Keep proof of sending: the inventory, the receipt, the notice of delivery
• Send the demand to the debtor himself, not to his relatives or acquaintances

How to send a debt repayment demand to the debtor

Send the debt repayment demand in a way that leaves you with proof of delivery. The most reliable option is a registered letter with a notice of delivery and an inventory of the contents to the debtor's address from the contract. The inventory confirms what you sent, and the notice confirms that the letter was received. If the debtor refuses to accept it, the letter will be returned with a note to that effect, and this will serve as evidence of the debtor evading receipt.

Courier delivery with a note of delivery will also do: keep the waybill and the recipient's signature. Email works only if the address is stated in the contract as a means of communication. For the court, the following will be useful:

• the inventory of the contents and the receipt for sending
• the notice of delivery or the returned envelope
• the courier waybill with a note of delivery
• a screenshot of the letter, if the email address is stated in the contract

The debt repayment demand did not work

If the debt repayment demand did not work, there are three paths further: a claim, a court order, or a notary's enforcement inscription. In court you obtain a judgment, then a writ of execution, and you pass it to a private or state court enforcement officer. A notary's enforcement inscription is suitable when the debt is undisputed and confirmed by documents that expressly provide for such a possibility.

To recover through court, you need documents confirming the debt: a loan agreement or a receipt, a calculation with interest, and evidence of sending the demand. The court enforcement officer then initiates enforcement proceedings: requests information on the debtor's accounts, property and income, and imposes arrests. If the debt is undisputed, the path is shorter — the notary makes an enforcement inscription, and it is passed to the court enforcement officer; if the debtor raises an objection, the notary cancels it and the dispute goes to court.

What you will need:

• Documents confirming the debt: a loan agreement, a receipt, a reconciliation statement, delivery notes.
• A calculation of the debt taking into account interest and penalty.
• A copy of the debt repayment demand and confirmation of its being sent to the debtor.
• The debtor's details for applying to the court enforcement officer.

A demand for repayment of the debt with a calculation is not persuasion but a pre-trial step that records the default. If the document does not contain the exact amount and proof of delivery, it will be of almost no help in court.