A Guide to Writing a Letter of Demand in Singapore For Recovering a Debt

What is a Letter of Demand?

Let us start with an illustration which will be used throughout this Article – A owes B a sum of S$40,000.00. Despite repeated reminders via emails and texts, A refuses to pay the debt due and owing and/or send any response to B. What can B do to get A to respond/pay?

The first step B can take is to send a formal request/notice to A to demand him to pay the S$40,000.00. This formal request/notice is called Letter of Demand. A Letter of Demand serves as a formal notice from the creditor (i.e. either an individual or a business) to the debtor (i.e. either an individual or a business) that they are in default of payment and that legal action may be taken against them if payment is not made by the specified deadline. It is an important first step in the debt recovery process in Singapore, as it gives the debtor an opportunity to pay the debt without the need to commence proceedings in court.

Preparation and Writing the Letter of Demand in Singapore For Recovering a Debt

Although B can draft his own Letter of Demand, there are several advantages of appointing lawyers to act on his behalf. Firstly, B is able to obtain comprehensive advice from his lawyers regarding the merits of his claim. Secondly, what are the chances for him to get a response from A who is trying to avoid him? The Letter of Demand from a lawyer would show that he is serious about taking action to resolve his matter. Thirdly, B would be able to obtain legal advice from his lawyers in the event he receives a response from A and does not know what to do next. And the list of advantages can go on.

What to include in the Letter of Demand

The Letter of Demand should include specific information such as the name and address of the debtor, the amount owed and the date by which payment is required.

How to Draft a Persuasive Letter of Demand to recover a deb

When drafting a Letter of Demand in Singapore, it is important to be persuasive to increase the likelihood of your debtor paying the debt owed. Below are some steps you may take to make your letter more compelling:
  1. Clearly State the Amount Owed and Reason for Debt –Give a thorough summary of the total amount due, together with any interest or late fees, and describe the circumstances surrounding the debt.
  2. Explain the Consequences of Non-payment- Be clear about the steps that you will take, such as launching legal action, if payment is not received by the due date.
  3. Set a Reasonable Deadline for Payment – Give a deadline for payment and state that failing to make payment by this date will result in legal action.
  4. Be Firm, but Polite – We understand that you may be frustrated with your debtor, however, avoid becoming confrontational; doing so might make the debtor less eager to cooperate. Instead, write clearly and formally to convey your seriousness while avoiding aggression.
  5. Include Supporting Documents-To support your claim, attach any supporting documents to your Letter of Demand such as invoices, contracts and past correspondence.
  6. Offer Payment Options- If possible, you may offer your debtor payment options such as a payment plan, or alternative modes of payment.
  7. Seek Legal Advice-Sometimes, if you are unsure of how to draft a persuasive Letter of Demand in Singapore, or are facing a complex debt situation, the best way for you  is to seek legal advice from a qualified lawyer, who will help you with drafting the letter.

What Happens When a Debt is Not Paid?

If you have sent a letter of demand to a debtor in Singapore and they have not made payment by the specified deadline, here are some options available for pursuing payment:

  1. Mediation– Mediation is a procedure where a neutral third person mediates a discussion between the creditor and debtor in an effort to achieve a settlement. This can be reasonably priced and it can be an effective approach to settle a financial issue without going to court.
  2. Small Claims Tribunal- If the debt amount is not more than S$20,000 (or not more than S$30,000 if there is a Memorandum of Consent from both parties), you can consider taking your case to the Small Claims Tribunals of the State Courts (SCT). Also, SCT claims have to be filed within 2 years of the event which creates your cause of action.  It is a simple and affordable process for resolving disputes. Most importantly, its decisions are legally binding on both parties. If you are unsure, you may seek legal advice on your available options. It is essential to note that lawyers are not allowed to represent parties for SCT matters. With reference to the above illustration, B is not able to use this option since the debt amount is S$40,000.00 (which exceeds the jurisdictional limit for SCTs).
  3. Civil Court – Your last resort should be filing a civil claim in court. This method may be more time-consuming and costly as compared to the SCT, but it allows you to seek legal judgement and you may recover the debt owed. Generally, for a debt amount not exceeding S$60,000.00 are dealt with by the Magistrates’ Court; for a debt amount more than S$60,000.00 but not exceeding S$250,000.00 are dealt with by the District Court; for a debt amount exceeding S$250,000.00 are dealt with by the High Court.

With reference to the above illustration, B would file his case in the Magistrates’ Court since the debt amount is below S$60,000.00.

Closing Thoughts

All in all, pursuing payment may be a complex process, and it is highly recommended for you to seek legal advice from a qualified lawyer in SIngapore when seeking debt recovery. At Advance Law LLC, not only can our lawyers draft a Letter of Demand on your behalf, they will also help you understand your legal rights and options, and provide guidance on the most effective way for you to pursue payment. 


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