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a small claims demand letter notifies an individual of a final attempt to collect a payment before the matter is escalated to court its often used as a last offer sometimes with a discounted settlement amount in order to resolve a financial dispute outside of the legal system in this video well discuss essential information regarding small claims demand letters as well as where to get a free and official template lets begin by clearing up what is small claims court small claims court is a division of the civil court system dedicated to handling minor financial disputes between two parties its crucial to understand the scope of the court in case the demand is not met and the matter has to be escalated heres some key information to note about small claims courts every state has small claims limits that determine the maximum amount claim limits usually range from 100 to five thousand dollars small claims court typically fast tracks hearings to resolve the minor disputes quickly petit