Letter of Demand

Letter of demand for money owed to you is an important step to attempt to resolve your debt recovery matter without investing the time and expense into commercial litigation or alternative dispute resolution.

Stonegate Legal’s debt recovery lawyers offer a comprehensive and complete A to Z of drafting and sending a lawyer letter of demand for outstanding payment in Queensland.

If you need to send a letter of demand with purpose, then you should engage a professional debt recovery lawyer to draft it and send it for you.

A lawyers letter of demand shows the debtor that you are serious.

If you are serious about recovering your debt then contact our dedicated lawyers.

However, if you do want to attempt to send a demand letter yourself then this guide will give you all the information you need to draft and send a letter of demand for outstanding payment, and a free letter of demand and checklist.

WE CAN DRAFT AND SEND YOUR LETTER OF DEMAND FOR A FIXED FEE

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OR CALL: 1300 545 133 AND SPEAK TO OUR LAWYERS

A demand letter is an important first-step in a proceeding for debt recovery being a final demand letter before legal action.

A demand letter, or overdue payment letter, states how much is owed, what for and when the invoice needs to be paid.

It may also include a warning that you will consider legal action if the debt is not paid by a particular date.

The title ‘Letter of demand‘ at the top of the page lets the debtor know you are serious about getting your money and is a warning letter for the recovery of outstanding payment.

Before you commence any legal action in the Queensland Courts for debt recovery it is a good idea to send the debtor an open demand letter and perhaps a without prejudice letter of offer.

We can Draft these Letters and Send them for a Fixed Fee.  This sends a strong message to your debtor that you are serious about recovering the debt, and you are not simply going to write it off.

If you do not want to engage a lawyer yet, then download our letter of demand template and checklist

What to Include in your Letter of Demand

If you are sending your letter by email, as well as mail, it should say “Letter of Demand” at the top, and be called “Letter of Demand”.

A good rule of thumb is to call the Word docx something like “Letter of Demand to XXX 30.08.20XX”

Does it include accurate information?

It is important that the debtor cannot say that the letter is incorrect, or that there is a genuine dispute about the content in the letter.

It is also important to correctly identify the debtor in the letter.  Be sure that you are addressing the letter to the same entity that you contracted with, or the same entity that actually owes you the debt.

Does the amount claimed include any extras?

You may be able to claim extra monetary amounts such as default interest or legal costs.  You may only legally be able to claim these amounts if the right to claim these amounts are included in your contract or terms & conditions.

You should double-check your contract terms.

Does the letter of demand foreshadow legal action?

The demand should include a short passage about the action you are legally allowed to take if the debtor does not pay.

You may be entitled to different types of legal action depending on the amount owed, and the entity you contracted with.

It is very important that you do not threaten or foreshadow a cause of action that you are not legally entitled to bring.

Is it Businesslike?

A demand is simply a commercial document.

Even though unpaid debts can seem personal, especially if you previously had a good relationship with the debtor, the best practice is to never get personal in a demand letter.

Your letter should not harass the debtor, but should be commercial and factually accurate.

Have you signed and dated the letter of demand?

You should ensure that the demand is dated the day that you send it.

Also, do not forget to sign the demand.

Have you attached copies of and supporting documents?

For example, an invoice, first and second late payment reminder letters and any relevant emails, faxes or letters, all relevant contracts and/or director’s guarantees etc. if needed.

What Should a Demand Letter Include?

A demand must include the following as a minimum:

1. The words “Letter of Demand” or “demand”;
2. The actual amount of the debt, the amount of any extras (interest etc.), and the total amount outstanding;
3. The time when the debt became due and payable – for example, if your invoice includes seven (7) day payment terms, then seven (7) days from the date of the invoice;
4. The date at the top of the Letter of Demand – if you are going to give them seven (7) or fourteen (14) days to pay, you will need a starting date for the calculation;
5. A detailed description of the debt – what the debt is owed for;
6. Payment terms in the letter of demand, such as seven (7) or fourteen (14) days – we suggest also including a specific time for payment, for example “by 4pm of Friday XX of XXX 20XX”;
7. A statement about how the debt is to be repaid – bank deposit, bank cheque, cash, etc.  It is common for the debtor to know your bank account already, as they may have been an existing customer, or the payment methods were included on the unpaid invoice(s); and
8. The letter of demand should include a short passage about the action you are legally allowed to take if the debtor does not pay. You may be entitled to different types of legal action depending on the amount owed, and the entity you contracted with.

If you do not want to engage a lawyer yet, then download our letter of demand template

Four (4) Tips from a Debt Recovery Lawyer

Tip 1 – Get Proof of Delivery

We strongly suggest that you send your demand letter by express post with tracking ID for proof of delivery, and by email with delivery and read notifications.

Alternatively, or as well as, you can send it by facsimile (if available) and/or you can engage a process server to personally serve your letter.

Tip 2 – Try to Avoid Litigation

Going through the Courts or QCAT can be expensive, and there are no guarantees that you will recover all of your costs.

You should give serious consideration to settling the matter early, even if it means that you take less as payment.

A commercial decision, to take 80% of the debt, for example, in exchange for immediate payment, will save you thousands of dollars in legal fees.

Tip 3 – Send a “Calderbank” without prejudice letter of offer

If you are serious about debt recovery then we recommend that alongside your open demand, you send a without prejudice letter of offer or compromise.

Also known as a “Calderbank Offer” this letter is an offer to settle the proceeding early.

If the debtor rejects the Calderbank offer and you get judgment for more than the offer, the debtor may be ordered to pay all of your reasonable costs in issuing a proceeding on an indemnity basis.  See below for more.

Tip 4 – Get the Debtor to Acknowledge the Debt

Remember that anything that you send to a debtor, and anything that a debtor sends to you – unless it is under the cover of without prejudice negotiations – is admissible!

Emails from the debtor acknowledging the entire debt, acknowledging their obligation to pay, etc. can be pleaded in Court documents and annexed to affidavits.

What you should Avoid with a Letter of Demand

When drafting a letter of demand, you must be especially careful not to do the following:

1. Foreshadowing legal action to recover a debt that is over six (6) years old.  A debt owing on a contract is statute barred after six (6) years from when the cause of action arose;
2. You must not harass a debtor.  A debtor can complain to the police if they allege harassment and so care should be taken not to do so; and
3. You must not draft your letter to look like a Court document or a lawyer’s letter if it did not come from a Court or law firm.

How the Debtor may Respond to your Letter of Demand

Once your debtor receives a copy of your demand for payment, they may do one or more of the following:

1. Acknowledge that they owe you the debt and attempt to repay you;
2. They may require that you provide them with better particulars of the debt;
3. Attempt to engage in Alternative Dispute Resolution, such as mediation or arbitration;
4. Flat out deny that they owe the debt, or that the transaction ever took place;
5. Deny part of the debt due to incomplete performance by you, incomplete building work for example;
6. Try to negotiate with you in an attempt to pay a lesser amount, they might make you an offer with a Calderbank Letter, or a counteroffer;
7. Put their fingers in their ears and do absolutely nothing.

Get a Lawyer to Draft and Send your Demand

A fixed fee letter from a lawyer, on our law firm letterhead, has a lot more weight than a letter you can do yourself, or a debt collector’s letter.

We are able to draft a letter with a full understanding of the law and make claims that are actually legally enforceable.    To ensure that you get the best results, and attempt at the best chance of securing your costs if it goes to Court, it is vital that you engage a solicitor that deals with debt recovery matters.

A small cost now, could mean the difference between getting paid, and having to write off the debt.

WE CAN DRAFT AND SEND YOUR LETTER OF DEMAND FOR A FIXED FEE

CONTACT US FOR A FREE CONSULTATION

OR CALL: 1300 545 133 AND SPEAK TO OUR LAWYERS

Without Prejudice Calderbank Letter of Offer

If you are serious about debt recovery then we recommend that alongside your open letter, you send a without prejudice letter of offer or compromise.

Also known as a “Calderbank Offer” this letter is an offer to settle the proceeding early.

If the debtor rejects the Calderbank offer and you get judgment for more than the offer, the debtor may be ordered to pay all of your reasonable costs in issuing a proceeding.

There is no guarantee that you will be awarded indemnity costs, it is discretionary and for the Court to decide.  However you are able to take steps to better your chances.

In Hazeldene’s Chicken Farm v Victorian Workcover Authority (No 2) [2005] VSCA 298 the Court said:

The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations. It is neither possible nor desirable to give an exhaustive list of relevant circumstances. At the same time, a Court considering a submission that the rejection of the Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree’s prospects of success, assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed;
(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it.

Debt Recovery Success Stories

We successfully recovered $50,000.00 by demand for a client who had no luck recovering the debt in over two (2) years.

Our letter of demand successfully encouraged a debtor to enter into a repayment deed with our client, sign an acknowledgement of debt, and adhere to a repayment schedule.

Another letter of demand made a debtor make contact with our client again after a long period of refusing to communicate, which eventually led to payment of the debt in full.

WE CAN DRAFT AND SEND YOUR LETTER OF DEMAND FOR A FIXED FEE

CONTACT US FOR A FREE CONSULTATION

OR CALL: 1300 545 133 AND SPEAK TO OUR LAWYERS

If you do not want to engage a lawyer yet, then download our letter of demand template

Demand Letter Checklist

The checklist below is not meant to be an exhaustive list, but if you follow the guidance in this article, and ensure that you check all of the boxes, then you will have successfully drafted and sent your demand letter.

This list may not be completely suitable in your particular circumstances, and you might consider letting our lawyers draft your demand for you.

The demand letter checklist is as follows:

1. Have you double checked the letter against your documents?  Are they correct?
2. Have you double checked the letter for spelling and grammar mistakes?
3. Is it read like a commercial document, succinct and factually accurate?
4. Have you double checked the contact details of the debtor?
5. Have you double checked if the letter is signed and dated correctly?
6. Have you got the correct date for payment from date of letter?
7. Have you remembered to attach any documents mentioned in the letter?
8. Have you got the correct amount owed / checked your math?
9. Have you got the correct date the debt was due?
10. Have you got the correct description of the debt?
11. Have you got the correct invoice numbers or invoice details?
12. Have you checked that you are entitled to claim the foreshadowed legal action?
13. Have you kept an exact copy of the demand for your records?

Sample Letter of Demand

Click the link below for a sample demand letter for money owed.  This demand template is just a free guide and should not be used in place of legal advice.

The sample demand letter format below is for informational purposes only and may not be relevant in your particular circumstances.  To be sure, let our lawyers draft it for you for a very reasonable fixed legal fee.

If you do not want to engage a lawyer yet, then download our letter of demand template