Debt Recovery – Letters of Demand

Debt Recovery – Letters of Demand

A letter of demand (whether issued by a creditor or a lawyer on the creditor’s behalf) to a debtor may result in payment of an outstanding debt and can be a cost-effective means of recovering money owed.

However, there are a few rules and tips which ought to be followed to ensure that a demand remains lawful whilst also having maximum effect.

Letters of demand must be courteous and not:

  • include any statements which are intended to mislead or intimidate the debtor by overstating the legitimate assertion of the creditor’s rights and entitlements to payment of the debt;
  • threaten criminal or disciplinary proceedings against the debtor if the debt is not paid;
  • use wording which is primarily designed to embarrass or frustrate the debtor.

Remember, it is possible to be polite and display firmness and resolve in pursuing a debt without descending into emotional, insulting, offensive, discriminatory, rude or intimidatory language. Remember – what you put in print in a letter of demand may well be produced in a subsequent court proceeding if the debt ultimately remains unpaid. Therefore, pause for a moment before hitting send and think about whether you would be comfortable with a Judge or Magistrate reading your letter.

Further, a letter of demand that is misleading or deceptive may also breach the Australian Consumer Law and result in you finding yourself on the wrong side of an ACCC investigation. Where a lawyer engages in this type of conduct, then he or she may also be in breach of professional conduct rules which can result in sanction.

Furthermore, avoid claiming a contribution for legal or other costs where there is no contractual basis to support such a claim. Making a claim to such costs could be misleading and deceptive. Similarly, avoid asserting that penalty interest or administrative penalties are payable unless there is a contractual basis to support any such claim.

If you need some more guidance on these points, the ACCC website also has helpful information and guidelines about what can and can’t be demanded in debt recovery actions.

Finally, if you have read this far and think that you need some practical advice or assistance in relation to your situation, then now is probably the time to get in touch.

Austral Legal can help and we offer an initial discounted 30-minute SmartMove appointment for $80 by phone or in person at our office.

Bookings can be made online or simply by phoning our office on 08 9745 9550.

Once we have a handle on what is required, we may well be able to offer a fixed fee for any further legal services, giving you cost certainty from the start.

Austral Legal. Practical advice.