How long do you have to pay a letter of demand or final notice?

Which letter is it?

Creditors escalate in steps, and the name at the top of the page tells you how much time you actually have. Read the first line and the last paragraph before anything else.

Document	Who sets the deadline	What happens next if ignored
Invoice reminder	The creditor	Another reminder, a phone call
Final notice	The creditor	Stop supply, a collections referral or a letter of demand
Letter of demand (often from a lawyer or agency)	The creditor	Possible court proceedings to recover the debt
Statutory demand (company debts of $4,000+)	The law — 21 days	Company presumed insolvent; creditor can apply to wind it up
ATO notices	The ATO	Varies — see tax debt business finance

The difference between the last few matters enormously. A letter of demand has a date the creditor picked. A statutory demand has a date set by the Corporations Act. The Federal Court’s guidance explains that a statutory demand must relate to due debts totalling at least $4,000 and requires compliance within the statutory period, currently 21 days. If the company doesn’t comply, it’s presumed insolvent.

What should you do before the date on a final notice or letter of demand?

Respond. Silence is what moves a creditor to the next step. business.gov.au’s guidance on managing debt says the same: speak to creditors early and explain your circumstances.

A good response, sent before the date, includes:

1. Acknowledgement of the amount (or a clear statement of any part you dispute and why).
2. A payment today or tomorrow, even a partial one, if at all possible.
3. A firm date for the balance and where the money is coming from — for example, “funding is being arranged and is expected to settle on the 14th”.
4. A request to hold further action while the plan is carried out.

Then keep the promise. Creditors extend goodwill once; the second missed date usually ends it.

What changes with a statutory demand?

Almost everything. Treat it as the most urgent item on your desk.

• Count the 21 days from service, not from when you opened the envelope.
• Get legal advice straight away if you think the debt is disputed or the demand is defective. The time to apply to set a demand aside is short, and missing it removes that option.
• Arrange funding immediately if the debt is owed. Property-secured loans of $20k to $250k are possible same day, and up to $5m is possible within 24–48 hours. Unsecured options, typically $5,000 to $500,000, can suit smaller demands for trading businesses.
• Pay in full, in cleared funds, before the deadline, and get written confirmation. Partial payment may not satisfy the demand.

If a demand has landed, don’t wait for the checker — enquire now and say it’s a statutory demand so the file is treated accordingly.

How much time does funding really need?

Work back from the date on the document, and leave a buffer:

• Final notice, 7 days: comfortable for most pathways if you start today.
• Letter of demand, 14 days: time to choose the right structure, but don’t let the first week slip.
• Statutory demand, 21 days: enough for secured or unsecured funding — if you act in the first week, not the third.

The triage checker converts your remaining days into business days and shows which pathways fit.

An illustrative example

Illustrative only. A small building company receives a letter of demand from a concrete supplier’s lawyers for $38,500, giving 14 days before court action. The company also has $22,000 owing to a steel supplier on a final notice. The director owns a home with equity and the company has steady progress claims coming.

The same day, the director emails both creditors acknowledging the amounts and confirming funding is being arranged, then enquires for $65,000 including a small buffer. A property-secured loan settles within the week; both suppliers are paid directly, and written confirmations are filed. The steel account, which had been on stop, reopens the same afternoon.

When should you get legal advice?

Not every letter needs a lawyer, but some do. Get advice promptly if:

• you’ve received a statutory demand, especially if any part of the debt is disputed;
• the letter comes from a law firm and mentions court proceedings;
• the amount claimed includes costs or interest you don’t recognise;
• there’s a genuine dispute about the work or goods supplied;
• you’ve received more than one demand from different creditors.

business.gov.au notes that if a customer doesn’t pay, creditors typically move from reminders to a letter of demand, then to dispute resolution, collection agencies or legal action. Knowing which stage a creditor is at helps you judge how much time — and goodwill — is left.

Can the creditor be paid directly from the loan?

Yes, where it helps. Paying a creditor directly gives them certainty and gives you a clean record that the demand was satisfied. Ask the creditor or their lawyer for written payment details and confirm them by phone on a number you already know before any money moves.

Answer the letter — see if you qualify

A demand letter is stressful, but it’s also a clear deadline — and clear deadlines are exactly what we work to. Tell us which document you’ve received, the amount and the date on it. There’s no credit check when you first ask what’s possible, we never send your details to a parade of lenders, and a real person reads it and calls you. Please be accurate on the form, including the type of letter and the date, so we can prioritise it properly.

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