A letter of demand is an important first step in any legal dispute. Are you in a position where you are considering writing a letter of demand to a debtor of yours?
This is not an uncommon occurrence, and it can be a great step towards recovering the debts you are owed.
It is a serious statement, however, so it is important you have some background knowledge before making any big moves!
What is a letter of demand?
A letter of demand is a letter written by a party and sent to another in an attempt to claim funds that they believe they are owed.
It is generally sent only after the creditor has attempted to recover the debts with no success and is considered a final act before a legal approach.
Be referred to the best dispute resolution lawyers on the Sunshine Coast for a letter of demand
What should you include?
There are no rules in the law regarding what you must include on a letter of demand.
However, a well-structured and informative letter of demand is definitely beneficial for your claim, especially if you wish to follow with court action!
A letter of the sort will include:
- The amount of money owed;
- The description as to why the money is owed;
- The date the payment must be received by;
- The date the letter of demand was sent;
- Proof the opposing party agrees to pay said debts;
- The consequences if debts remain unpaid.
You should further make it completely clear what the purpose of the letter is, to collect debts, and make it obvious that it is a letter of demand and will likely follow with legal action if funds are not paid to you in the time period stated.
In specific situations, you may want to consider adding relevant documents (contracts, etc) to the letter of demand as evidence to both the debtor and the potential courtroom that you are owed said debts.
When can a letter of demand benefit me?
A letter of demand can be beneficial to the debt collection process in a variety of ways.
Debtors may have issues with finances that they are unwilling or afraid to openly discuss, so a letter may be the prompt needed for them to have a conversation with you about their situation.
Furthermore, if court action follows the letter, it is a clear piece of evidence to the courtroom that you did actively attempt to collect debts (to no avail) and that you are not wasting the court’s time and/or resources.
Be referred to the best dispute resolution lawyers on the Sunshine Coast for a letter of demand
How can the other party respond?
There is a range of actions the opposing party may take in response to your letter of demand.
They may choose to simply repay the debts, admitting they owe you money and taking action to ensure it is in your possession in the foreseeable future.
This is obviously the optimal response and the general goal of a letter of demand, as avoidance of court proceedings may usually be in the favour of all involved parties
They however also may respond to your letter by denying they do or have ever owed you such debts. In this case, court proceedings may be necessary, and it is suggested that you gather sufficient evidence, such as contracts between parties or prior admission of being in debt to you, for the matter to be present while in the court of law.
Other responses may include asking for further information about the matter, entering into a negotiation with you, or simply not responding or ignoring said debts.
What to do if the debtor doesn’t respond?
As aforementioned, legal proceedings are generally followed if a letter of demand is not responded to or acted upon by a debtor.
It is wise to give your debtor adequate time to act upon their debts to you, as courtrooms will generally take this information into account in your favour.
You also have the ability to send a second, final letter of demand. This can be more to the point as they should already have the suggested information in their possession from the original letter.
You may want to take this route to avoid additional costs from a court matter.
This may also be in your favour if a court case arises as they may consider the extra mile you went to ensure your debtor is aware of the debt and consequences if ignored.
If your second or first, if you choose not to send a second, the letter is ignored or not acted upon it may be wise to then follow up on the consequences you possibly outlined in the letter of demand.
Depending on the nature of the matter, this will generally result in court proceedings and possibly other consequences if stated.
Remember to take the specifics of your matter into account and decide the best option for you or your business before taking any action!
Should I get legal help?
You may be wondering if legal assistance is the right way to go when drafting, sending, or acting upon a letter of demand.
It is recommended that you seek assistance when drafting or sending such a letter.
A professional debt recovery lawyer can help to assist you in knowing your rights and composing an effective letter for such a matter.
If your matter escalates to a court proceeding, this is further recommended as a proceeding can be costly and extremely time-consuming, and having a professional to represent you can ensure you achieve the optimal results from a situation of the sort!
Be referred to the best dispute resolution lawyers on the Sunshine Coast for a letter of demand
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