A letter of demand is a great first step in getting paid from a debtor with an outstanding debt.
Are you a creditor with a debtor that will not pay you what they owe? If so, you are likely feeling incredibly frustrated and may not know how to proceed from your current point.
If this is the case for you, you may wish to consider using a letter of demand to help you recover your debt.
A letter of demand is a great tool to use to do one of two things:
- receive payment from your debtor; or
- inform them of what is to come.
A letter of demand does, however, carry some legal weight, so it is important that you know how to effectively write one before you begin this process.
In this article our debt collectors will discuss what a letter of demand is and 3 ways to ensure it is effective and proper in the eyes of the law.
What is a Letter of Demand?
So, what exactly is a letter of demand?
A letter of demand is a tool used by many creditors to warn clients to pay the debts they are owed.
This is generally a tool used only as a last resort as it is simply not required if debtors comply and pay their debts as agreed upon.
A letter of demand is used to establish your legal position against the other side and inform them of the consequences that will take place if they continue to not make payments.
It should state your rights within the law and demand that the payment takes place within a certain time period.
Setting a time limit is optional but can ensure that the debt is paid to your preference as it has not been in the past.
If you set a time limit on the debt and it is disregarded, you will usually proceed to take action within a court, an action that should be disclosed within the letter of demand.
A letter of demand can be extremely useful to you as a creditor as it places pressure on your debtor to make the payment.
It also acts as proof against many claims a debtor may make in their defence if it does result in court action, as you can prove that they knew the terms of the debt and were warned of the consequences of non-compliance.
Tips for Writing a Demand Letter
This article will outline three (3) tips for effective drafting of a letter of demand, including:
- Be Professional
- Be Informative
- Don’t be Unreasonable
We will explain these in more detail below.
For starters, you should ensure that you are remaining 100% professional when writing a demand, as you should with all client interactions, to make it an effective letter.
When a client continues to ignore your payment requests, it is easy to become frustrated.
This is likely the case if you are sending a letter of demand in the first place, but it is important that you stay professional in your language within the letter.
You should avoid language or phrases that will likely come off to a reasonable person as rude, aggressive, threatening, or offensive in order for the letter to be effective. Why you may ask?
Well, first of all, the debtor is more likely to pay someone who does not insult them as a pose to someone who does.
Furthermore, coming across as aggressive or threatening poses a threat to your reputation as a creditor and may not hold up too well if your matter goes to court.
No matter how much you dislike the client, try your hardest to remain as professional as possible to get the most out of the letter.
Another great tip when trying to write an effective letter of demand that does what it is intended is to ensure you are being informative and detailed. This tip may seem a little unnecessary.
Why would I want to spend more of my time adding a lot of information to the letter when I’ve already had time wasted by this debtor?
Well, making sure that you include as much relevant information as possible can ensure your letter is as effective as it can be.
If your matter does eventually end up in a courtroom, a judge will be more likely to award you with your money if you have included details about key dates, invoices, and other information, in the letter.
So, what should I include in the letter? There are several details that you should include in a letter of demand, such as:
- Your full name and address
- If the debt belongs to a business, the title and address of the business
- A detailed description of the deceptive behaviours you believe has taken place, including dates and evidence if applicable
- Any laws broken or believed to be broken over the course of the ordeal
- Any damages you have experienced due to the ordeal
- Your demands, including when and how you wish for the other party to respond.
Don’t be Unreasonable
Another tip for writing an effective demand letter is to ensure you are being reasonable with your demands.
As much as it is tempting to demand your money back immediately or other potentially unmeetable criteria, this won’t always benefit you!
This is because after a debtor does not meet the criteria discussed in a letter of demand, you will usually proceed to a courtroom to get what you want, something that should be stated in the letter.
Proceeding to trial is not always the best option, however, as it is an expensive and time-consuming ordeal.
Get a Letter of Demand from a Debt Collection Agency
Are you struggling to write your demand? Or maybe you want to try one last route before a letter of demand? Either way, hiring a debt collector can be helpful to you.
A debt collection agency can write your letter of demand for you, so you do not have to take more of your time to do so.
They will also likely have more experience with demand letters, which can ensure that your letter is as effective as it can be.
Furthermore, before sending a letter of demand you may wish to try debt collection to receive payment.
Debt collectors are professionals and may find more success with debt recovery than you will as a creditor.
Do you have unpaid business invoices or debts to collect?
Advance debt collection is an Australia-wide commercial debt collection agency and credit and accounts receivable management. We can recovery your debts, conduct skip tracing, and manage your accounts receivable. We collect your debts for commission only. This means no collection, no commission. We are professional debt collectors with combined 20 years of experience to help you collect your debts. We are partnered with expert litigation lawyers with years of experience in debt recovery, enforcement, and insolvency. Under the Agents Financial Administration Act 2014 Advance Debt Collection Pty Ltd hold authority number 4583821 to act as a debt collector. ADC Advance Debt Collection® is a registered trademark.