Letter of demand: what it is and what to do

A letter of demand is a formal written request to pay an amount or perform an obligation, usually within a stated period. It is not a court order. It is, however, the standard first step before legal proceedings — so it must be taken seriously and responded to properly.

Step 1 — Read it carefully

• Who is it from? An attorney, a debt collector, or the creditor directly?
• What is the exact amount and what does it relate to?
• What is the deadline to respond or pay?
• What action is threatened if you don't comply?
• Are interest, costs or 'collection charges' included? Are those amounts lawful?

Step 2 — Check the debt

Has the debt prescribed? Most contractual debts prescribe after three years of non-acknowledgement under the Prescription Act. Did you ever acknowledge the debt in writing, or make a payment? That resets the clock. Is the amount correct? Compare it to your statements and contract.

Step 3 — Respond in writing, on time

Never ignore a letter of demand. Even a short written response — acknowledging receipt and asking for information or proposing a payment arrangement — protects your position. If the debt is disputed, say so clearly and give reasons. If you cannot pay in full, propose a realistic arrangement in writing.

Step 4 — Negotiate

• Ask for a settlement discount in exchange for early payment.
• Request a written payment arrangement with no further interest if you keep to the schedule.
• Ask for the original credit agreement and statements if you doubt the amount.
• Request that calls and collection contact happen only in writing.

When to escalate

If the letter is from an attorney, the amount is large, or you are at risk of summons or judgment, get help immediately. Judgment against you affects your credit profile for years and can lead to garnishee orders or attachment of assets.

How we help

We review the letter, check the debt and prescription, draft your response, and negotiate with the creditor or collector. We are not registered debt counsellors — for formal debt review we refer you to a registered counsellor. Book a consultation.