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What Can You Do if Your Letter of Demand is Ignored?

In the course of running your business, there may be times when you face unpaid invoices. If this is the case, you may have sent a letter of demand to resolve the issue, which requests the other party to take action and fulfil their obligations. However, there may be times when the deadline passes, and you receive no response. This can not only be frustrating, but can also interrupt your ability to operate your business. As a result, it is essential that you understand what you can do next if your letter of demand is not answered. This article will set out possible options if your letter of demand is ignored.

Final Demand Notice

If a letter of demand is ignored or unanswered, you should consider sending one final demand letter. This is usually a very short and sharp letter which annexes your previous correspondence and gives the party a further seven days to comply with the demand.  

Your original letter of demand may have gone unseen or still be sitting on someone’s desk to action. By sending a final demand notice, you can potentially avoid the additional costs of escalating the matter to court.  

Letters of demand outline the actions you will take in the event the other party fails to respond. In most cases, this involves taking the matter to court. Following through with what you said you would do in your letter of demand shows the other party that you take the matter seriously.

If the other party does not reply to your letter of demand, you may consider taking the matter to the local court (for debts less than $100,000). The information outlined below applies to the local courts of New South Wales (NSW) but it is similar in every state and territory. Check your relevant local court website for information specific to your state or territory.

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The Local Court Process in NSW

The local court aims to find a just, quick and cheap resolution to matters. The small claims division of the local court deals with matters relating to debts less than $10,000.  The court aims to resolve disputes within six months of the date you file the initial claim. Often, people self-represent in matters before the local court, however, it is still a good idea to seek legal advice on what to expect. A lawyer can advise you on ways to frame your argument and the evidence you need to make your case. If the matter is of a higher monetary value, it will take place in the general division of the local court, which hears cases between $10,001 and $100,000.

To begin proceedings in the local court, you or your lawyer will need to file a statement of claim with the court. You then serve the statement of claim on the other party (the defendant). The defendant has 28 days to respond to the statement of claim through a defence or otherwise. If they fail to respond within that time frame, you can apply for a default judgment. A default judgment is an automatic judgment against a party due to the party’s failure to respond to legal proceedings.

Key Takeaways

As a business owner, ensuring your payments come on time is a significant issue, and it can be frustrating when this does not happen. If you have sent a letter of demand and it has been ignored, this can cause stress and delay your day-to-day commercial operations. However, you should know that the letter is not the final course of action for your dispute. Instead, there are other options to escalate the matter further. These include:

  • sending a final demand notice to the other party;
  • seeking legal advice about future pathways to recover your owed debt; and
  • commencing court proceedings.

Considering these steps ensures you are creating a legal strategy that is both time and cost-effective.

If you have further questions about an unanswered letter of demand, contact our experienced debt recovery lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions

What is a letter of demand?

A letter of demand is a document you send to another party that acts as a warning in writing to give them the chance to fuifil their obligations and fix the situation. Usually, it will involve you sending a formal letter to somebody who owes you money. Often, you will specify in your letter of demand that you will take legal action if action is not taken.

Can I take my matter to the local court?

You can take your matter to the local court if it relates to a debt of less than $100,000.

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Eugenia Munoz

Eugenia Munoz

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