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Responding to a letter of demand

Information about writing a response to a letter of demand.

If someone is chasing you for ​money, they may send you a letter of demand, or they might phone you, or send you an email or sms. There are different ways that you can respond to their claim, including:

  • ​admit you owe some or all of the money
  • deny you owe the money and explain why you don't owe it
  • ask for more information, without admitting or denying you owe the money
  • negotiate by offering to pay a different amount, or offer to pay some or all of the money in instalments.

When the other party receives your response, they will decide whether to accept your offer, put a counter offer or take the case to court. 

Whenever you write to the other party, you should make sure that you don't say anything tha​t could be used against you in court. You should double check any money amounts and dates to make sure they are correct.

If you want to offer to settle the matter, you can write the words 'Without Prejudice' on your letter. This means that things you say in a genuine attempt to resolve the dispute out of court can't later be used against you.

For more instructions on writing a response to a letter of demand, see below.

If you have received a default notice from your lender for a consumer credit contract, see  Loans and credit cards.  

If you are being chased for a consumer credit debt, such as a mortgage, car loan, personal loan or a credit card debt, you have other rights and can try external dispute resolution (EDR). There are lots of benefits of trying to resolve the dispute through EDR, rather than through court. If you have been served with a statement of claim for a bank loan or credit card, you should get urgent legal advice. For more information see External dispute resolution, in Disputes with banks or credit providers.

  • Alert

    Alert

    It is best not to ignore a claim that is made against you. If you don't respond, the other party may decide to start a court case against you. This will cost time and money, and will increase the amount they are claiming from you. If you have received a statement of claim, go to Responding to a statement of claim.

    The time limit to start a court case to recover a debt is six years from when the money became owed, when the last repayment was made, or when the debt was last acknowledged in writing (whichever comes last). If you are unsure, you should get legal advice.

     

If you agree that you owe some or all of the money that the other party is asking for, you can tell them:

  • ​the amount of money that you agree you owe 
  • why you don't think you owe the whole amount
  • that you would like to pay the debt by instalments if you cannot repay the full amount right away. 

Sample: Sample response to letter of demand 1 

You may decide that you don't owe some or all of the money that the other party is claiming. If this is the case, you should tell the other party why you deny their claim. 

You can do this by speaking or writing to them. It is a good idea to always be polite and courteous when communicating to the other party.

If the other party does not agree with you, they may decide to start a court case against you.

Sample: Sample response to letter of demand 2​

If you don't know whether you owe what the other party is claiming because they didn't give you enough information, you can write back to them to ask for more information. This is known as a 'request for further and better particulars'. 

In your letter you should be careful not to admit or deny the claim. You should ask the other party for information and documents that will help you decide whether you owe them the money, such as: 

  • ​​invoices and bills
  • quotes
  • contracts
  • emails and letters
  • statements.

Sample:  Sample letter asking for more information

You can contact the other party at any time to reach an agreement about the claim. You can offer to pay a lesser sum, or an amount in instalments until the debt is repaid. 

Negotiating with the other party doesn't need to be formal. You can negotiate with the other party in person or on the phone, or by writing a letter, email or sms.

If you come to an agreement, it is a good idea to put your agreement in writing. For more information see Resolving your dispute.

If you negotiate verbally, keep notes of any conversations you have with the other party, including dates and times. These may be helpful if you end up going to court. For more information see Negotiation, in the Representing Myself topic. 

If you need help working out what payments you can afford, you may want to speak to a financial counsellor. To find a free financial counsellor, go to the National Debt Helpline website. 

If you cannot reach an agreement with the other party, they may decide to start a case in court against you. It is a good idea to try to resolve your dispute with the other party, before going to court.

The time limit to start a court case to recover a debt is six years from when the money became owed, when the last repayment was made, or when the debt was last acknowledged in writing (whichever comes last). If you are unsure, you should get legal advice.