HomeFWJ TakeawayResourcesHow to respond to a letter of demand

The importance of how to respond to a letter of demand cannot be overestimated.

Failure for an individual to respond to a letter of demand can either lead to

  • court proceedings;
  • a statutory demand; or
  • bankruptcy proceedings.

Failure by a company to respond to a letter before action can lead to

  • court proceedings;
  • a statutory demand; or
  • winding up proceedings.

Therefore, even if the debt is relatively low, it is very important for the recipient of a solicitor’s letter or letter before action to deal with it quickly and effectively. Failure to do so and simply ignoring it in the hope that the letter before claim will go away will often simply agitate the creditor and lead to the next step in the recovery action which is often county court proceedings, high court proceedings or worse, some sort of insolvency type proceedings such as a winding up petition or bankruptcy petition.

  • even if the letter of demand amount is something which cannot be payable all in one go, it usually possible to open lines of communication with the creditor.
  • it must be remembered that a creditor is hoping to get paid for its unpaid invoice or unpaid invoices and the collecting of the unpaid invoices is its primary goal. Creditors want to avoid having to go to the next stage of the potential claim and issuing proceedings.

Therefore, getting assistance to negotiate a settlement with the creditor can be very sensible. At FWJ we can assist you with that. If you cannot afford to pay the debt in one go, then consider what possible payment plan you can come up with.

If the debt is one that you simply cannot pay for various reasons then there are other options which we can help you with. For an individual, you might want to seek some form of insolvency advice or think about a possible individual voluntary arrangement. For a company there are sometimes ways of restructuring a business or potentially thinking about the relevant rescue options such as a company voluntary arrangement or even some form of administration. There are other ways also to consider such as refinancing of a business or sale of other assets. Whatever the situation, it is important to properly respond to a letter of demand.

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