If you fail to pay a Money that is owed by one person or business to another. after receiving an account, a The person or organisation to whom a debtor owes a debt. A document that sets out what a person wants to happen to their money and other property after they die. often send more formal notices or letters to encourage you to pay.
If the debt is covered by Statutory rules made by parliament or by bodies the parliament delegates power to, for example a local council or a registration authority. See delegated legislation; statute., that legislation might require the creditor to send you particular notices before it can take further action to force you to pay the debt. For example, if your debt is a loan covered by the National A debt that does not have to be paid until some future time. Being allowed to pay later, in the future, for something you are getting now. Code (NCC), a creditor will almost always have to send you a Failure to do something that is legally required. For example, a person who fails to make a payment on their car is in default on the loan; if they continue to be in default the creditor may issue a default summons to take the debtor to court. notice under section 88 of the NCC, giving you 30 days to bring the loan account up to date before the creditor can take further action (for more information about the NCC, see Chapter 5.7: Understanding credit and finance).
Letter of demand – final notice
If the debt is still owing after the time periods in the Found in a statute of delegated legislation. For example, a statutory authority or body is aperson or organisation that has special powers given by parliament to do work for the public benefit. notices (if applicable) have expired, a A letter, usually written by a lawyer for their client, or by a creditor, telling the person who receives it that unless they do what the letter says they will be sued. Often a letter of demand asks a debtor to repay a loan to avoid being sued, but the demand could be about any legal claim. may be sent to you by the creditor, their solicitors or a debt collection agency. A letter of demand usually warns that if you do not pay the debt within a certain time period (often seven days), you will be sued in a An independent body that hears legal claims brought by parties and decides between them. Serious cases are heard by a judge and jury, or just a judge. Less-serious cases are heard by a magistrate. for payment of the debt.
Costs or fees on a letter of demand
Letters of demand are not court documents. While debt collection agencies or solicitors may attempt to add a fee to the Claimed but not proved. For example, the police can allege in court that a car was stolen, but they then have to prove it with evidence. If you say a person did something illegal you are making an allegation. Unless you can back it up, you will not be able to win a court case about it. debt, often referred to as ‘costs’, it is legally questionable as to whether they are entitled to such a fee. Therefore, unless there is Material presented to a court to prove or disprove a fact. It can include what witnesses say as well as documents and other objects. that the terms of the An agreement that the law will enforce. between you and the creditor entitle the creditor to this payment, it is recommended that you do not pay this fee.
In Australian Competition and Under the Australian Consumer Law, a person who buys goods or services for less than $40 000 or for personal or home use. Commission v Sampson  FCA 1165, a Victorian A legal practitioner (lawyer) who sees clients and opens files to deal with their legal matters but usually does not appear in court. See also barrister. admitted engaging in Something done by a manufacturer or seller that is unfair, dishonest or likely to mislead a consumer when buying goods or services. in breach of section 52 of the Trade Practices A written law made by parliament. Also called an ‘Act of parliament’, ‘statute’ or legislation. 1974 (Cth). This conduct is also likely to be considered to be a breach of the current equivalent provision, which is section 18 of the Australian Consumer Law (which is a Extra information accompanying an Act of parliament or a contract, such as tables, lists or forms. in the Competition and Consumer Act 2010 (Cth)). The conduct in that case was claiming – in letters and notices sent on behalf of video rental stores to customers making demands for the payment of small debts for video rentals – that the video store was entitled to recover an extra $30 (or other amount specified) in solicitor’s The amount charged by a lawyer for legal work. Lawyers can only charge the amount agreed with the client in a costs agreement or the amount stated by a court in its rules. The party who loses a case usually has to pay all their own costs plus most of the costs reasonably incurred by the other side. See also indemnity costs., in addition to the claimed debt, despite the store having no necessary entitlement to recover such a cost.
What do you do when you have received a letter of demand?
As a letter of demand is often the last letter a creditor will send you before suing you, it is important that you make yourself aware of your legal rights and clarify whether you actually owe the creditor at all, and whether you owe the amount being demanded. Therefore, you should decide whether you actually owe the creditor.
Decide whether you actually owe the creditor
In order to do this, it might be necessary to contact the creditor to obtain a copy of any contracts allegedly made between you and the creditor. Make any request for documentation in writing, and keep a copy of your letter. When requesting documentation from the creditor in writing, it is recommended that you include a sentence such as, ‘Please note that in requesting the above documents, I do not acknowledge Legal responsibility, enforced by civil or criminal courts. for any agreement, contract or account’.
When you receive the contract from the creditor, check it carefully. If you are unsure whether the contract is a Legally binding or effective. or enforceable agreement, seek advice from a solicitor or financial counsellor. See Chapter 5.4: Financial counselling services, and Chapter 2.4: Legal services that can help.
If you decide you do owe the creditor
If you decide that you do owe the creditor, you should do the following things to check that you owe the debt claimed:
- Check the amount that the creditor claims is owed. This is especially important in credit payment situations, or where the creditor has been sold (‘assigned’) the right by the A person or organisation directly involved in a court case. Parties include the plaintiff or applicant, the defendant, and any third party added to the action, but not independent witnesses. you originally owed to recover the debt from you.
- If you do not agree with the amount being claimed, write to the creditor asking for a detailed statement of individual items, interest (if appropriate), terms, charges, etc. Keep a copy of this letter.
- If you then receive a letter of demand from a debt collection agency or the creditor’s solicitors, write to them explaining that a request has been made to the creditor for a more detailed statement, and enclose a copy of that earlier letter.
- When you receive the statement, check it carefully.
- If there appears to be errors or areas of doubt, write to the creditor requesting either clarification or correction of the statement.
If you have difficulty checking the details of a statement provided by the creditor or if you don’t get a satisfactory response, seek advice from a solicitor or financial counsellor. See Chapter 5.4: Financial counselling services, for details of how to contact a financial counsellor, and Chapter 2.4: Legal services that can help.
Check that the creditor has not run out of time to To take legal action in a civil case. you for the debt (see ‘Statute-barred debts’, below).
Make yourself aware of your rights and options (see ‘Your rights and options’, below).