A letter of demand tends to arrive without warning, often from a lawyer and always with a deadline. It says you owe money or did something wrong, and that court proceedings will follow if you don’t pay or respond by a certain date. It’s meant to be unsettling. Read it twice before you do anything.
What the letter is, and isn’t
A letter of demand isn’t a court document, and it doesn’t mean you’ve been sued. It’s a formal request, and often the step before proceedings are filed. It also creates a record. If the matter does reach court, a judge may later look at whether the letter was reasonable and how you responded.
Don’t ignore it
Ignoring a letter rarely makes it go away. Silence can lead to proceedings being filed when the dispute could have been settled, and in a debt claim it can lead to judgment being entered against you without a hearing. Even if you think the claim is wrong, a short reply saying you dispute it and are getting advice is better than nothing.
Don’t rush either
The opposite mistake is replying the same day, angry, with everything you know. Things written in haste get quoted back. Avoid admitting the claim, offering a payment “to make it go away” or attacking the other side. Unless a letter is properly marked otherwise, assume anything you write may one day be read by a judge.
What to gather
the letter itself and the envelope or email it came in;
the contract, invoice or agreement it refers to;
emails, messages and notes that bear on the dispute;
anything showing payments made or work done.
Check the time limits
Claims have limitation periods. In Victoria, most claims for breach of contract must be started within six years. If the events in the letter happened long ago, the claim may be out of time. That’s a question to answer before you reply, because acknowledging a debt in writing, or paying part of it, can restart the clock.
If the claim is right
Sometimes a letter of demand is simply correct. If you do owe the money, the best outcome is usually to say so and propose a way to pay, such as a short payment plan, before costs start to build. Creditors often accept a realistic plan over the cost and delay of court. Put any agreement in writing, and make sure it says the matter is resolved once you’ve paid.
Your options
Depending on the facts, the right response might be to pay, to negotiate, to deny the claim and explain why, or to propose mediation. Often it’s a combination: dispute what’s wrong, accept what’s right and offer a way to settle the rest. A considered reply sent within the deadline puts you in a far better position than a fast one.
Ruth or Liam will read the letter and your documents, tell you plainly how strong the claim looks and draft a reply that protects your position. If the claim is sound, we’ll say so, and help you settle it on the best terms available.
