Letter of Demand Ignored? Your Next Steps in Australia

You sent a letter of demand. The deadline passed. Nothing happened.

You have three escalation options in Australia. Which one you choose depends on how much you are owed, who owes it, and how far you want to go.

Why debtors ignore demand letters

Understanding why helps you choose the right next step:

• They think you will not follow through — most people send one letter and give up
• They cannot pay — they may be insolvent or broke
• They dispute the debt — they believe they do not owe it, or the amount is wrong
• They are disorganised — wrong address, missed deadline, lost paperwork
• They are stalling — hoping you will forget or settle for less

Ignoring a letter of demand does not make the debt disappear. It just means you need to escalate.

Step 1: Send a final demand

If your initial letter gave them 14 or 21 days, send a final demand next.

A final demand is shorter, firmer, and sets a hard deadline — typically 7 days. It states clearly that if payment is not received, you will commence proceedings without further notice.

What a final demand includes

• Reference to the original letter and the date it was sent
• Confirmation that payment has not been received
• The outstanding amount, including any interest or costs
• A final deadline (typically 7 days)
• A clear statement that tribunal or court proceedings will be commenced
• Your contact details for payment or settlement

When to skip the final demand

You do not always need one. Skip it if:

• Your original letter already said “final notice”
• The debtor has responded and is clearly disputing the debt
• The debt is against a company and exceeds $4,000 (consider a statutory demand instead)
• The debtor has disappeared or is avoiding service

Claim Done can prepare and send a final demand for $49, delivered by email.

Step 2: File a tribunal or court claim

If the final demand is ignored, your next step is typically a claim in the tribunal or court that hears money claims in your state.

Some states use a civil tribunal and others use the Magistrates Court or Local Court, each with its own limits (see the list below). In New South Wales, a business owed money has a debt claim for the Local Court of New South Wales, not NCAT: NCAT hears consumer claims, which are brought by the consumer. Small claims processes are designed to be accessible without needing a lawyer.

Which tribunal or court to use

• New South Wales: Local Court of New South Wales, not NCAT (NCAT hears consumer claims, which are brought by the consumer). Small Claims Division up to $20,000; General Division over $20,000 up to $100,000
• Victoria: Victorian Civil and Administrative Tribunal (VCAT), Civil Claims List
• Queensland: Queensland Civil and Administrative Tribunal (QCAT), minor civil dispute, up to $25,000
• Western Australia: Magistrates Court of Western Australia, minor case claims up to $10,000; general procedure claims up to $75,000
• South Australia: Magistrates Court of South Australia, minor civil action up to $12,000; general claims up to $100,000
• Tasmania: Magistrates Court of Tasmania (Civil Division), claims up to $50,000
• Australian Capital Territory: ACT Civil and Administrative Tribunal (ACAT), civil disputes up to $25,000
• Northern Territory: Northern Territory Civil and Administrative Tribunal (NTCAT), small claims up to $25,000

What you need to file

• Completed application form or, in New South Wales, a statement of claim (varies by state)
• Statement of claim — what happened, what you are owed, and why
• All evidence — invoices, contracts, emails, photos, receipts, your letter of demand, proof of delivery
• Filing fee: filing fees change each 1 July; check the current fee on the tribunal’s or court’s website before you file

What happens after you file

Once you file, the tribunal or court will:

1. Issue the application — the debtor is formally notified and given a deadline to respond
2. Schedule a hearing — if the debtor does not pay or settle, a hearing date is set
3. Conduct the hearing — both parties present their case, the tribunal or court makes a decision
4. Issue an order — if you win, the tribunal or court issues a legally binding order for payment

If the debtor still does not pay after a tribunal order or court judgment, you can enforce it through garnishee orders, warrants for seizure and sale of property, or examination summons.

Claim Done prepares tribunal applications for all Australian states. Tell us what evidence you have, answer a few questions, and we draft your application and a witness statement for you to lodge. For a New South Wales debt, Claim Done’s Tribunal Application ($97) drafts a Local Court statement of claim.

Step 3: Issue a statutory demand (companies only)

If the debtor is a registered company and owes you $4,000 or more, a statutory demand is your most powerful tool.

A statutory demand is a formal notice under the Corporations Act. It gives the company 21 days to pay the debt in full — or face presumption of insolvency and potential wind-up proceedings.

Why statutory demands work

If they do not, and they do not apply to set aside the demand within 21 days, you can apply to wind up the company. That means:

• The company is presumed insolvent
• A liquidator can be appointed
• Directors face personal liability risks
• The company’s bank accounts can be frozen
• Trading can be stopped

Even if you do not intend to wind up the company, the threat is typically enough to force payment.

Requirements for a valid statutory demand

• The debt must be at least $4,000
• The debtor must be a registered company (Pty Ltd or Ltd)
• The debt must be liquidated (a specific, ascertainable amount)
• The debt must not be genuinely disputed
• You must use the prescribed form
• You must swear a supporting affidavit verifying the debt

How to serve a statutory demand

A statutory demand must be served personally on the company:

• Hand-delivering it to the registered office during business hours, or
• Leaving it at the registered office with a person who appears to be at least 16 years old, or
• Using a process server to effect service

Email and regular post are not sufficient.

Once served, the company has 21 days to either pay or apply to set aside the demand. If they do neither, you can file a wind-up application in the Federal Court or Supreme Court.

Claim Done prepares the statutory demand form and supporting affidavit template for $97. You are responsible for arranging service (we can recommend process servers if needed).

Which option should you choose?

Debt under $4,000, individual or sole trader debtor: → Send final demand, then file a tribunal or court claim

Debt under $4,000, company debtor: → Send final demand, then file a tribunal or court claim

Debt $4,000 to $10,000, individual debtor: → Send final demand, then file a tribunal or court claim

Debt $4,000 to $10,000, company debtor: → Consider statutory demand if you want fast pressure, otherwise a tribunal or court claim

Debt over $10,000, individual debtor: → Send final demand, then file with the tribunal or court that hears a claim of that size in your state

Debt over $10,000, company debtor: → Statutory demand first, then wind-up proceedings if not paid

Debt genuinely disputed: → Skip final demand, go straight to tribunal or court

What if the debtor has no money?

If the debtor is genuinely broke, escalating may not help. A tribunal order or statutory demand cannot create money that does not exist.

Before you escalate, consider:

• Does the debtor own property, have a job, or run a business?
• Are they trading while insolvent (companies only)?
• Is there a guarantor or co-debtor you can pursue instead?
• Is the debt large enough to justify the time and cost of enforcement?

If the debtor is insolvent, you may need to lodge a proof of debt in their bankruptcy or liquidation. You are unlikely to recover the full amount, but you may receive a percentage.

Final checklist before you escalate

Before you send a final demand, file a tribunal or court claim, or issue a statutory demand, make sure you have:

• Proof of the original letter of demand — delivery confirmation, email receipt, or Australia Post tracking
• All supporting evidence — invoices, contracts, emails, photos, receipts, bank statements
• Correct debtor details — full legal name, ABN or ACN, current address
• Accurate debt amount — principal, interest, and any costs clearly itemised
• No genuine dispute — if the debtor has raised a legitimate dispute, you need a hearing, not a demand

If you are missing any of these, sort it out before you escalate. A poorly prepared application or statutory demand can be dismissed, costing you time and money.

What happens if you do nothing?

If you do nothing, the debt does not go away — but your ability to recover it does.

In Australia, limitation periods apply to debt recovery. For most simple contracts, you have 6 years from the date the debt arose. Once the limitation period expires, the debt becomes statute-barred and the debtor can raise it as a defence.

Do not wait. If your letter of demand has been ignored, escalate now.

How Claim Done helps with escalation

Claim Done prepares all three escalation options:

1. Final demand — drafted, formatted, and sent by email
2. Tribunal application — your application and a witness statement, drafted for your state for you to lodge ($97; for a New South Wales debt, a Local Court statement of claim)
3. Statutory demand — form and supporting affidavit template for $97

Tell us what evidence you have, answer a few questions, and we generate the documents citing the applicable Australian law. No subscription, no hourly fees, no lawyer required.

But for straightforward debt recovery, Claim Done gets you to the next step fast.

Frequently Asked Questions

How long should I wait after sending a letter of demand before escalating?

Wait until the deadline in your letter of demand has passed — typically 14 or 21 days. If you hear nothing, send a final demand with a 7-day deadline. If that is also ignored, file your tribunal application or statutory demand immediately.

Can I skip the final demand and go straight to tribunal?

Yes. A final demand is not legally required, but it is good practice. It shows the tribunal you gave the debtor every opportunity to pay, and it sometimes prompts payment without needing to file. If the debtor is clearly disputing the debt or has disappeared, skip the final demand and file immediately.

What if the debtor responds after I file the tribunal application?

You can still settle. If you reach an agreement, you can either withdraw the application or ask the tribunal to make consent orders reflecting the settlement terms. Claim Done can prepare a deed of settlement to formalise the agreement.

Is a statutory demand better than a tribunal application for company debts?

For debts over $4,000 owed by a company, a statutory demand is typically faster and more effective. It gives the company 21 days to pay or face wind-up proceedings, which is serious pressure. Tribunal applications take longer but may be better if the debt is disputed or you want a judgment for enforcement.

What if I cannot afford a lawyer to enforce a tribunal order?

You do not need a lawyer to enforce a tribunal order. You can apply for a garnishee order, warrant for seizure, or examination summons yourself. The process is designed to be accessible without legal representation. If the debtor still will not pay, consider engaging a debt collector on a commission basis.