What Happens After You Send a Letter of Demand in Australia?

# What Happens After You Send a Letter of Demand in Australia?

You’ve sent your letter of demand. Now what?

After you send a letter of demand in Australia, you’ll typically see one of three responses: payment, negotiation, or silence. What you do next depends entirely on which one you get.

The three most common responses

Response 1: Full payment

The debtor pays the full amount within the deadline you specified.

What to do:

• Confirm receipt of payment in writing
• Issue a receipt or tax invoice if applicable
• Keep records of the payment and correspondence
• Honour any agreement to waive interest or costs in exchange for prompt payment

Timeline: Most demand letters give 7–14 days to pay. If payment arrives within that window, the matter is resolved.

Common in: Straightforward debts where the other party simply needed a formal nudge — unpaid invoices, rental bonds, small contractual disputes.

Response 2: Negotiation or partial payment

The debtor acknowledges the debt but can’t pay in full immediately. They might offer a payment plan, dispute part of the amount, request more time, or propose a reduced settlement.

What to do:

• Respond promptly and professionally
• Consider a payment plan agreement if they’re genuinely unable to pay in full
• Ask for evidence if they dispute part of the claim
• Get any agreement in writing before accepting partial payment
• Use a deed of settlement if you accept less than the full amount to prevent future claims

Timeline: Negotiations can take days to weeks. Set clear deadlines for each step.

Common in: Disputes involving sole traders, small businesses, or individuals facing genuine cash flow issues.

Response 3: Silence

No reply. No payment. No acknowledgment.

What to do:

• Wait until the deadline in your letter passes
• Send a final demand if you haven’t already
• Decide whether to escalate to tribunal, court, or engage a debt collector
• For company debtors owing $4,000+, consider a statutory demand
• For amounts under the tribunal threshold in your state, lodge a tribunal application

Timeline: If you gave 14 days and hear nothing, you can escalate immediately after that period ends.

Common in: Debtors who are insolvent, disputing the debt without engaging, or hoping you’ll give up.

What if they dispute the debt?

A disputed debt is not the same as silence. If the debtor responds claiming they don’t owe the money — or owe less than you claim — assess whether their dispute has merit.

Genuine dispute:

• They provide evidence contradicting your claim
• The contract terms are ambiguous
• There’s a legitimate question about whether the work was completed or goods delivered

Bad faith dispute:

• Vague denials without evidence
• Changing their story
• Raising new objections not mentioned before

If the dispute appears genuine, you may need to negotiate or prepare for tribunal. If it’s bad faith, proceed to tribunal and let them raise their defence there.

When to escalate to tribunal

If the debtor doesn’t pay and doesn’t negotiate in good faith, your next step is usually the relevant state or territory tribunal:

• NSW: NSW Civil and Administrative Tribunal (NCAT) — up to $30,000
• VIC: Victorian Civil and Administrative Tribunal (VCAT) — up to $10,000
• QLD: Queensland Civil and Administrative Tribunal (QCAT) — up to $25,000
• WA: Magistrates Court (small claims) — up to $10,000
• SA: South Australian Civil and Administrative Tribunal (SACAT) — up to $12,000
• TAS: Magistrates Court (small claims) — up to $5,000
• ACT: ACT Civil and Administrative Tribunal (ACAT) — up to $25,000
• NT: Local Court — up to $25,000

When to lodge:

• The demand deadline has passed with no payment
• Negotiations have stalled or failed
• The debtor is clearly avoiding payment
• The debt is within your state’s tribunal threshold

What you’ll need:

• Copy of your letter of demand
• Proof it was sent and received (or attempted delivery)
• Evidence supporting your claim (invoices, contracts, emails, photos)
• Any responses from the debtor

Special case: Company debtors owing $4,000+

If the debtor is a registered company and owes $4,000 or more, you have a powerful option: a statutory demand under the Corporations Act.

A statutory demand gives the company 21 days to pay or face wind-up proceedings. It’s the most serious form of demand you can send.

When to use it:

• The debt is liquidated (a specific, ascertained amount)
• The debt is undisputed or the dispute is clearly without merit
• You’re prepared to follow through with wind-up proceedings if they don’t pay

When not to use it:

• The debt is genuinely disputed
• The amount is uncertain or includes estimated damages
• You’re not prepared to escalate to Federal Court if necessary

What about debt collectors or lawyers?

After sending a letter of demand, some people engage a debt collector or lawyer to pursue the matter further.

Debt collectors:

• Useful for ongoing follow-up and negotiation
• Typically charge a percentage of the amount recovered (25–40%)
• Can’t force payment, but can apply pressure and manage the process
• Best for debts where you don’t want to handle tribunal yourself

Lawyers:

• Necessary for complex disputes, high-value claims, or matters heading to court
• More expensive than tribunals or debt collectors
• Appropriate when the other party is legally represented or the matter involves difficult legal questions

For most small debts under $10,000, tribunal is faster and cheaper than engaging a lawyer.

How long does the whole process take?

Letter of demand to payment: 7–30 days if the debtor pays voluntarily

Letter of demand to tribunal hearing: 2–6 months depending on the tribunal and how quickly you lodge

Tribunal to judgment: Usually on the day of the hearing, or within 1–2 weeks

Judgment to enforcement: If they don’t pay after judgment, enforcement can take weeks to months depending on the method (garnishee, warrant, etc.)

Common mistakes after sending a letter of demand

Accepting partial payment without a written agreement

If you accept $500 on a $2,000 debt without documenting the terms, you may lose the right to claim the remaining $1,500.

Waiting too long to escalate

Some people send a demand, hear nothing, and then wait months before acting. The longer you wait, the harder it becomes to recover the debt.

Not keeping records

If you end up in tribunal, you’ll need proof you sent the demand and proof of the debt itself. Keep everything.

Threatening action you won’t take

If your letter says “we will commence tribunal proceedings if payment is not received within 14 days,” you need to follow through. Empty threats damage your credibility.

How ClaimDone helps after you send your letter

ClaimDone’s letter of demand service includes automatic delivery to the debtor. If they don’t pay, ClaimDone can prepare your tribunal application, including the application form, statement of claim, and supporting evidence bundle. You file it with the tribunal yourself, but the hard work is done.

If the debtor wants to negotiate, ClaimDone can draft a payment plan agreement or deed of settlement to formalise the terms.

Flat fees. No subscription. Australia-wide.

Final checklist: What to do after sending your letter

• Day 1–7: Monitor for responses. Reply promptly to any genuine negotiation attempts.
• Day 7–14: If you hear nothing, consider sending a follow-up or final demand.
• Day 14+: If the deadline passes with no payment, decide whether to escalate to tribunal or engage a debt collector.
• Throughout: Keep records of all correspondence, payment attempts, and evidence.

Ready to take the next step?

If your letter of demand didn’t result in payment, ClaimDone can prepare your tribunal application in under 60 minutes. Upload your evidence, answer a few questions, and we’ll generate the forms you need to file.

Start your tribunal application now — fixed fee, no subscription, Australia-wide.

Frequently Asked Questions

How long should I wait after sending a letter of demand before taking further action?

Wait until the deadline specified in your letter passes. If you gave them 14 days to pay, you can escalate on day 15. Sending a final demand first is optional but can be useful if you want to give them one last chance before tribunal.

What if the debtor offers to pay half now and half later?

Get the agreement in writing before accepting any partial payment. Use a payment plan agreement that specifies the amounts, dates, and consequences if they default. If you accept partial payment without documenting the terms, you may lose the right to claim the balance.

Can I go straight to tribunal without sending a letter of demand first?

Technically yes, but most tribunals expect you to attempt to resolve the dispute before lodging an application. Sending a letter of demand first shows you made a genuine effort to settle, and it often results in payment without needing tribunal at all.

What if they claim they never received my letter of demand?

This is why proof of delivery matters. If you sent it by registered post, you’ll have tracking confirmation. If you sent it by email, keep the sent message and any delivery receipts. ClaimDone’s service sends letters automatically and provides proof of delivery for this exact reason.

Is it worth pursuing a debt under $1,000 through tribunal?

It depends on your time and the principle involved. Tribunal filing fees are usually $50–$200 depending on the state, and the process takes a few months. If the debtor is clearly avoiding payment and you have strong evidence, it’s often worth it — but weigh the time cost against the amount owed.