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Disclaimer: The material in this print-out relates to the law as it applies in the state of Victoria. It is intended as a general guide only. Readers should not act on the basis of any material in this print-out without getting legal advice about their own particular situations. Victoria Legal Aid disclaims any liability howsoever caused to any person in respect of any action taken in reliance on the contents of the publication.

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Creditor notices and letters of demand

Find out about the notices or letters creditors may send to you if you owe them an overdue debt.

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A creditor may send you a notice or letter of demand if you do not pay a debt.

You have the right to dispute the debt but this should be done promptly and in a lawful manner.

Note: Some creditors may send letters that look like court documents to make you think court action has been started. This is illegal. If you are not sure whether a document is real, get legal help.

Statutory notices

Some legislation, such as the National Credit Code (part of the National Consumer Credit Protection Act 2009), requires creditors to send you specific notices before they can take further action to force you to pay the debt.

These notices say how long you have to bring your repayments up-to-date before further action will be taken.

For example, if a loan is covered by the National Credit Code you must usually be given at least 30 days to bring the account up-to-date before court action or repossession.

Letters of demand

Creditors will usually (but not always) send a letter of demand, also known as a final notice, before taking further action. The letter may also come from the creditor’s solicitor or a debt collection agency.

A letter of demand asks you to pay the debt and tells you that the creditor will sue if you do not pay. If you do not pay the debt, or if other arrangements are not made, the creditor may start court proceedings. Visit Notice of legal action – being sued.

Creditors generally send a letter of demand to your last known address. If you move, you do not have to tell creditors your new address. However, if you decide not to, then court action may be taken against you and orders made without you knowing.

Added costs

Some letters of demand include claims for additional amounts of money above what you owe, referred to as ‘fees’ or ‘costs’ for recovering the debt.

You may not have to pay the extra costs if they are not included in the terms of the contract between you and the creditor. Get legal advice.

What should I do if I receive a letter of demand?

Sometimes it can be hard to know whether the debt is yours, and whether the correct amount is being claimed. This may especially be the case if the debt has been ‘sold’ by the creditor to another party, such as a debt collection agency.

If a creditor has contacted you about a debt you think you do not owe, or if you disagree with the amount being claimed, you have a right to dispute the debt or the amount of the debt.

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