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  • Neomal Perera

Civil Litigation - Claiming a debt, letter of demand and debt collectors.

When someone owes you money, especially in a business relationship, the first thing most people think of is to “get the debt collectors onto the job”. While this is one method of initiating the process of recovery, there is also the possibility of sending a letter of demand to the debtor yourself.


A letter of demand is used to communicate with someone who a creditor reckons owes them a certain amount of money. The letter usually will describe what the claim is about and mentions the amount that is being claimed and sets a deadline giving the alleged debtor a certain amount of time to make the payment. The letter should also state if the payment is not made by the due date what further action will be taken.


What needs to be borne in mind is that the amount so claimed can be disputed by the debtor. If the amount claimed is disputed, then the debtor should inform the creditor in writing that the claim is disputed. If the creditor is not informed and the debtor remains silent the creditor could then inform debt collectors and it will be the debt collectors who then get in touch with the debtor.


There could be creditors who without sending a letter of demand, directly put debt collectors on the job. If a debt collector contacts the debtor, then it is necessary that the debtor inform the debt collector in writing that the debt/claim is disputed. Good reasons need to be given as to why the claim is disputed. Remaining silent is not an option when a debt collector makes contact. If the debt collector is made aware with good reason as to why the debt is disputed, the debt collectors will not and cannot proceed to claim the amount from the debtor thereafter.


If the claim is disputed, then the creditor needs to first establish with sufficient proof that the debt in fact is due. This can be done at two forums of adjudication. If the claim amount is less than $30,000 then an application needs to be made to the Disputes Tribunal to prove and obtain an order that the debt is due.


If the claim is more than $30,000 then proceedings need to be filed in the District Court to get an order saying the debt is due. Either way at the end it could make the claim an “undisputed claim” and the debtor then needs to pay the creditor. If the claim is not proved, then the debtor does not have to pay.


If someone owes you money and you are wondering what to do, we can advise and help you as to how you should move forward. We can also assist if you have received a letter of demand, or a debt collector has contacted you and you are wondering what to do.