Investment Loss Recovery Demand Letters

Recover failed investments, enforce promissory notes, and document losses for tax deductions

California State Bar #279869

When Investments Go Wrong

You invested money — in a friend's business, a startup, a real estate deal, or a private fund — and now you can't get it back. The person who took your money isn't returning calls, or they're making excuses, or the business failed and no one is accountable.

I help investors in this exact situation. My demand letters serve a dual purpose:

Collection tool: A formal legal demand that creates real pressure to repay
Tax documentation: If the money is truly gone, the demand letter series becomes evidence for an IRC §166 bad debt deduction or §165(g) worthless security loss

The Critical Question: Debt vs. Equity

How your investment is legally classified determines your recovery options and tax treatment:

Factor	Debt (Loan)	Equity (Investment)
Legal structure	Promissory note, loan agreement	Stock certificate, LLC membership, SAFE note
Repayment obligation	Borrower must repay regardless of outcome	No guaranteed return; profit-dependent
Collection rights	Sue for breach of note; garnish, levy	Limited to breach of fiduciary duty or fraud claims
Tax deduction	IRC §166 bad debt (ordinary or capital loss)	IRC §165(g) worthless security (capital loss only)
Partial deduction?	Yes (business debt only)	No — must be totally worthless

Many "investments" are actually loans. If someone said "invest $50,000 in my business and I'll pay you back with 10% interest," that's a loan — even if they called it an "investment." The legal characterization depends on the actual terms, not the label.

Types of Investment Losses I Handle

Investment Type	Common Issues	Recovery Approach
Personal loan to friend/family	No written agreement, gift presumption	Demand letter + payment evidence to prove loan
Business startup investment	Business failed, operator disappeared	Fiduciary duty demand + fraud investigation
Promissory note default	Borrower stopped paying installments	Acceleration + demand + potential filing
Real estate syndication	No distributions, no reporting	Books & records demand + breach of operating agreement
Convertible note / SAFE	Company failed; note never converted	Demand for repayment of principal + accrued interest
Partnership capital contribution	Partner misused funds, no accounting	Dissolution demand + accounting + breach claims

Anonymized Case Examples

Personal Loan Recovery: A client lent $40,000 to a college friend for a restaurant venture via a handwritten promissory note. After two years of excuses and $3,000 in sporadic partial payments, I sent a formal acceleration and demand letter. The borrower retained counsel and negotiated a 12-month payment plan. Collection in progress — on track for full recovery.

Failed Startup Investment → Tax Deduction: A client invested $85,000 into a tech startup via convertible note. The startup failed, founder relocated overseas. After two demand letters (one to the company, one personally to the founder) and documentation of the company's dissolution, I prepared an IRC §166 package showing the note was worthless. The client's CPA claimed the deduction, recovering approximately $22,000 in tax savings.

Partnership Dissolution: A client contributed $60,000 to a 50/50 partnership. The partner refused to provide financial records and was diverting business revenue. I sent a books & records demand under Corp Code §16403, followed by a dissolution and accounting demand. The partner settled within 45 days, returning $48,000 to avoid the cost and exposure of litigation.

Pricing

$575

Single demand letter

Collection or tax documentation

$575-750

IRC §166 documentation series

2-3 letters + CPA package

$1,250

Pro se filing setup

Complaint + instructions

$240/hr

Attorney representation

Or contingency if fraud claims viable

Lost Money on an Investment?

I can help you recover it — or at least document the loss for a tax deduction.

Email owner@terms.law