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A letter of demand is a letter from the other party asking for money to be paid. It often warns you that if this is not done they may start a court case to recover the money you owe them.
When you receive a letter of demand, this might be the first time you find out that someone is chasing you for money.
A letter of demand will usually state:
The letter may be sent by post, email or fax. The demand can also be made by phone or in person.
When you respond to a letter of demand, you can:
Whenever you write to the other party, you should make sure that you don't say anything that could be used against you in court. You should double check any money amounts and dates to make sure they are correct.
When the other party receives your response, they will decide whether to accept your offer, put a counter offer or take the case to court.
If you and the other party reach an agreement, you should record your agreement in writing. For more information, see Resolving your dispute – Put it in writing.
If you need help working out what payments you can afford, you may want to speak to a financial counsellor. To find a free financial counsellor, go to the Financial Rights Legal Centre website.
What you write in your response to a letter of demand could be used against you later if the case goes to court. If you are not sure how to respond to a letter of demand, you should get legal advice.