A letter of demand is an incredibly important first-step in a proceeding for debt recovery.- A letter of demand states how much is owed, what for and when the invoice needs to be paid.
- It may also include a warning that you will consider legal action if the debt is not paid by a particular date.
- The title ‘Letter of demand’ at the top of the page lets the debtor know you are serious about getting your money.
Before you commence any legal action in the Queensland Courts for debt recovery it is vital that you send the debtor an open letter of demand and a without prejudice letter of offer.
At Debt Recovery Qld we can draft these letters and and send them on your behalf. This sends a strong message to your debtor that you are serious about recovering the debt, and you are not simply going to write it off.
Contact us today if you need us to send a letter of demand
Open Letter of Demand
- Does it include precise and accurate information? Could anyone say that something in the letter is false or misleading?
- Does it include a late payment interest rate or fee for collection? These may only be recoverable if it states it in the contract with the debtor.
- Does it mention the action that you are prepared to take if the debtor does not pay?
- Is it polite and respectful? (It shouldn’t harass the debtor).
- Have you signed and dated it?
- Have you attached copies of all relevant supporting documentation? For example, a contract, invoice, first and second late payment reminder letters and any relevant emails, faxes or letters, all relevant contracts and/or director’s guarantees etc. if needed.
- Have you kept a copy of the original documents and the signed letter of demand?
Contact us today if you need us to send a letter of demand
A Letter of Demand must include:
- Amount of the debt;
- Date the debt was due and payable;
- Date of the Letter of Demand;
- Description of the debt (such as what the money is owed for); and
- Any relevant evidence such as contracts, invoices, emails agreeing to work or other written agreements that you have with the person/company you are claiming the money from.
- A time and date on which the debtor has to pay the debt. We suggest giving then 7 or 14 days.
And you must be aware of any claim amount limitations (i.e. minimum and maximum dollar amounts), and any time restriction limitations for claiming your debt.
Without Prejudice Letter of Offer
If you are serious about debt recovery then we recommend that alongside your open letter of demand, you send a without prejudice letter of offer or compromise.
Also known as a “Calderbank Offer” this letter is an offer to settle the proceeding early. If the debtor rejects the Calderbank offer and you get judgment for more than the offer, the debtor may be ordered to pay all of your reasonable costs in issuing a proceeding.
There is no guarantee that you will be awarded indemnity costs, it is discretionary and for the Court to decide. However you are able to take steps to better your chances.
In Hazeldene’s Chicken Farm v Victorian Workcover Authority (No 2) the Court said:
The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations. It is neither possible nor desirable to give an exhaustive list of relevant circumstances. At the same time, a Court considering a submission that the rejection of the Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree’s prospects of success, assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed;
(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it.
Contact us today if you need us to send a Calderbank letter and letter of demand
Letter of Demand Checklist
- Have you double checked the letter against the your documents?
- Have you double checked the letter for spelling and grammar mistakes?
- Have you double checked the contact details of the debtor?
- Have you double checked if the letter is signed and dated correctly?
- Have you got the correct date for payment (7 days from date of letter)?
- Have you remembered to attach any documents mentioned in the letter?
- Have you got the correct amount owed / check your maths?
- Have you got the correct date the debt was due?
- Have you got the correct description of the debt?
- Have you got the correct invoice numbers?
Contact us today if you need us to send a letter of demand
Why Get a Lawyer to do it
A letter from a lawyer has a lot more weight than a letter you can do yourself, or a debt collector’s letter. We are able to draft a letter with a full understanding of the law and make claims that are actually legally enforceable. To ensure that you get the best results, and attempt at the best chance of securing your costs if it goes to Court, it is vital that you engage a solicitor that deals with debt recovery matters.
A small cost now, could mean the difference between getting paid, and having to write off the debt.
Contact us today if you need us to send a letter of demand
Telephone No.1300545133