Letter of Demand Form 22.10.

2010

Letter of Demand
A LETTER OF DEMAND is a formal request to be paid an outstanding debt. If you
are owed money you can send a letter threatening to take court action to recover
your debt if you are not paid within a specified period of time.

Letters of Demand are very useful. They encourage debtors to pay their debts but avoid
the costs of using lawyers and chasing money owed through the courts. Every
small/medium-sized business should be familiar with how to write and serve a Letter of
Demand.

Letter of Demand: More Information & FAQs

What is a Letter of Demand?

A Letter of Demand is a formal request to be paid an outstanding debt.

If you are owed money – for example, an outstanding bill for goods or services that has
not been paid – you can send a letter threatening to take court action to recover your debt
if you are not paid within a specified period of time.

What do debtor and creditor mean?

The term ‘debtor’ refers to the person or organisation that owes the money. The term
‘creditor’ refers to the person or organisation that is owed the money.

What are the advantages of sending a Letter of Demand?

There are several advantages of using a Letter of Demand:

 Gives a clear notice of your intention to commence legal proceedings if not paid
 Gives the debtor one more chance to pay you
 Maintains goodwill before going forward with potentially expensive litigation
 May be used as evidence in court that you gave the debtor ample opportunity to pay
 Written proof that you have tried to settle the matter amicably, etc.

How do I send a Letter of Demand?

First, check your contract or agreement with the person who owes you money to ensure
you are making the demand in the correct manner and to the correct address.

Second, attach any relevant contracts, agreements, invoices and evidence that you
supplied the goods or services as promised. These are evidence of your claim in the Letter
of Demand.

Third, do not imply that court proceedings have commenced and do not make your Letter
of Demand look like a court document.

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Letter of Demand Form 22.10.2010

Last, send the Letter of Demand registered post or by courier to ensure you have proof
that is was delivered. Then allow a reasonable time for the person who owes you money to
comply with or respond to the Letter.

What should I do if I receive a Letter of Demand?

Most important – do not ignore a Letter of Demand.

Immediately check the Letter of Demand to ensure you agree with the amount owed. If
you disagree with the amount owed or do not understand how the amount has been
arrived at, write to the person or organisation who sent the Letter of Demand asking for
clarification or for any missing information.

If you do not believe you should pay the claim, immediately seek legal advice to dispute it.

How do I pay a Letter of Demand?

If you agree with the claim, contact the creditor and work with them to negotiate a
payment schedule.

Ensure you make it clear to the creditor that your discussions are on a “Without Prejudice”
basis. This means that you can discuss the payment schedule without losing your legal
right to change your position in the future, should you not reach agreement and end up
going to court.

What if I can’t pay a Letter of Demand?

If you cannot afford to immediately pay the full amount, offer to pay in instalments and
agree a payment schedule with your creditor.

Remember, most creditors are willing to accept less than the full amount to avoid the time
and expense of chasing the money via the courts.

If you are not able to pay at all, then write a letter to the creditor letting them know this.

We hope you found this information on the Letter of Demand helpful.

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