Letter of demand (unpaid debt)

A letter of demand has one job. It puts on the record that you asked for your money, said exactly how much, and gave a deadline. Most debts that get paid after a demand get paid because the debtor can suddenly see that the matter is no longer drifting. The rest of the time the letter earns its keep a different way, by becoming the first document you hand to the clerk of the court.

What this document does and when to use it

Use this template when a fixed amount is owing to you and the due date has passed. That covers an unpaid invoice, a personal loan to a friend, money for goods you delivered, work you finished, or a signed acknowledgement of debt. The letter has no legal force of its own. What it has is evidential weight. It fixes the amount, the date and your version of events at a moment when the debtor still has a chance to disagree.

If your matter may end up in the Small Claims Court, the letter is not optional. That process requires a written demand delivered to the debtor at least 14 days before the summons is issued, and the clerk will ask to see it. Check whether your claim fits that court using our Small Claims Court calculator.

One thing the letter cannot do, and you must not believe otherwise. It does not stop the prescription clock. Under the Prescription Act 68 of 1969 only service of a summons or other court process, or the debtor's own acknowledgement of the debt, interrupts prescription. A demand letter, however firmly worded, does not. If your three years is nearly up, the letter is not your answer. Issuing summons is.

Before you send it: get these facts straight

Write nothing until you can prove four things on paper. That the debt exists, which usually means an agreement, an invoice or a message where the debtor accepts the arrangement. What the original amount was. That it became due, meaning the date payment was supposed to happen and has not. And what the outstanding balance is today after every payment received.

That last one trips people up. Go through your bank statements and find each payment, with its date. If you claim R18 000 and the debtor produces a R2 000 transfer you forgot about, you have handed them a reason to treat everything else you say as unreliable.

Gather the attachments while you are at it: the signed agreement or a written record of an oral one, the invoice by number, a statement of account, proof that you delivered, and screenshots of any messages where the debtor promised to pay.

Two checks before you send. First, run the dates through our prescription checker, because a prescribed debt is a complete defence and you may be about to spend money chasing nothing. Second, if the money is owed under a credit agreement regulated by the National Credit Act 34 of 2005, a separate notice under section 129 of that Act is required before you enforce, and this letter does not replace it.

Walking through the letter, paragraph by paragraph

The heading line does more work than it looks. LETTER OF DEMAND: R[AMOUNT OUTSTANDING] OWING TO [YOUR FULL NAME] tells the reader in one line what this is, and it makes the letter findable in a file six months later.

Paragraph 1 establishes who you are. "I am the creditor in this matter." Short on purpose. If you are claiming for a business, say so here instead, naming the registered company.

Paragraph 2 is the story of the debt. "On [DATE THE DEBT AROSE] you and I entered into" the agreement, followed by what you did under it. Keep it to what happened, not how you feel about it. An oral agreement is still an agreement, so say "an oral agreement for the sale of goods" rather than pretending there was a written contract.

Paragraph 3 separates the original amount from the payments. "Payment of R[ORIGINAL AMOUNT] became due on [DUE DATE]" is the sentence that makes the debt enforceable, because a debt with no due date is very hard to demand. If there have been part payments, list them and the date of the last one.

Paragraph 4 gives the number you actually want and lists what you are attaching. This is the paragraph the debtor's attorney will read first.

Paragraph 5 records that you already tried. "Despite [DESCRIBE YOUR EFFORTS]" with the dates of the reminders. It removes the excuse that they never knew.

Paragraph 6 is the demand itself. A number of days, and the actual calendar date they fall due on. Give both. "Within 14 days" invites an argument about when counting starts; a date does not. Paragraph 7 removes the last practical excuse by giving full banking details and a reference.

Paragraph 8 states the consequence. "I intend to take further steps to recover the amount, which may include issuing summons." Note what it does not say. It does not threaten arrest, blacklisting or the sheriff arriving on Tuesday.

Paragraphs 9 and 10 are the ones people delete, and they should not. Inviting a written dispute or a payment proposal makes you look reasonable, and it often produces a reply that acknowledges the debt, which does restart prescription.

The signature block asks for your identity number or company registration number. Include it. It identifies you properly for any later court process.

A worked example

This example is illustrative only.

Thandi Mokoena does freelance bookkeeping in Benoni. In March she finished a year end clean-up for a small hardware business and invoiced R14 500 on invoice 0117, payable within 30 days. The owner paid R4 000 in May and then stopped answering. Thandi sent two email reminders and phoned once.

Her paragraph 2 says she was engaged to perform bookkeeping services and completed the work described in invoice 0117. Paragraph 3 says R14 500 became due on 15 April, that R4 000 was paid, and that the last payment was on 8 May. Paragraph 4 claims R10 500 and lists three attachments: the email accepting her quote, the invoice, and her statement of account. Paragraph 6 demands R10 500 within 14 days, by a stated date. She emails it and posts a registered copy the same afternoon.

The owner replies offering R2 000 a month. That reply is a written acknowledgement of the debt, which is worth more to Thandi than the letter itself.

The mistakes that make a letter like this useless

Square brackets left in the text. It tells the debtor you downloaded a form and did not finish it. Read the whole letter aloud before sending.

An amount you cannot support. A round number pulled from memory, or a figure that differs from your invoice, costs you credibility in front of a magistrate.

Threats you cannot carry out. Saying you will have someone arrested, or blacklisted, or their goods removed, is not just empty. It can be harassment, and it turns your own letter into evidence against you. The same goes for insults and capital letters.

No proof of delivery. A letter you cannot prove arrived is a letter that, in law, may as well not exist. This is the single most common reason a demand fails later.

The wrong recipient. Demanding from a trading name instead of the registered company, or from a director when the company owes the money, means you have demanded from someone who owes you nothing.

Letting the deadline pass in silence. If nothing happens on day 15, you have taught the debtor that your deadlines are decorative.

How to deliver it and prove you did

Delivery is where these matters are won and lost, so use a method that generates evidence.

By hand is best. Print two copies, have the debtor or their receptionist sign and date one, and keep it. If they refuse to sign, note the date, time, place and the name of the person you handed it to.

Registered post gives you a post office slip and a tracking number. Keep both, stapled to your file copy, and post to the address in the agreement if there is one, because that is usually the address the debtor chose for notices. Email is fast and self-documenting: keep the sent copy and save any read receipt or reply.

Do two of these at once. It removes the argument that "I never received it" before it starts. When a debtor later denies knowing about the demand, the dispute turns entirely on what you can produce, not on what you remember doing.

If it does not work

Send one short follow-up noting the deadline has passed and that you are proceeding, and keep proof of that too. Then choose your forum.

The Small Claims Court costs nothing in legal fees, uses no attorneys, and the clerk helps you complete the summons. It is for individuals suing, not companies. Take your letter and your proof that it was delivered at least 14 days earlier. The Magistrates' Court handles larger claims and claims by companies and trusts, and the clerk of the civil court can explain how to issue summons there.

If you cannot afford an attorney, a university law clinic or a community advice office will often help at no charge, and our legal aid page sets out who qualifies. If you are chasing a business customer, how to recover a debt from a customer who will not pay covers the commercial route.

LawMatch is not a law firm and this article is not legal advice.

Frequently asked questions

Do I need an attorney to send a letter of demand?

No. Anyone can write and send one, and a letter signed by you personally is just as valid as one on a law firm's letterhead. An attorney's letter sometimes lands harder, which is what you are paying for.

Does sending it stop the debt from prescribing?

No. Only service of a summons or the debtor's own acknowledgement interrupts prescription under the Prescription Act 68 of 1969. If your time is nearly up, get advice about issuing summons rather than sending another letter.

How long a deadline should I give?

Fourteen days is customary, and it matches what the Small Claims Court process requires. Shorter can look unreasonable. Longer wastes time you may not have.

Can I claim interest as well?

Often yes, depending on the agreement and the type of debt, and there are limits on how much interest can accumulate. Work out your position with our debt interest and in duplum calculator before you put a figure in the letter.

What if they reply and dispute the amount?

That is a useful outcome. Get their version in writing, compare it against your documents, and correct your figure if they are right. A demand for the correct smaller amount is far stronger than a disputed larger one.