Debt recovery · 6 November 2026
What should a Victorian lawyer ask before a letter of demand?
Five things, before you start typing. Who actually owes the money. How much, and for which invoices. When it fell due, and whether anyone paid or acknowledged it later. Whether the contract lets you add legal costs. And whether your client will sue if they don't pay. Miss one and the letter is either useless or a problem for you.
Person, or company?
Clients hand you a trading name. The letter needs the legal entity. For a company, pull a current ASIC extract and match the registered name, ACN and registered office. Check it's still registered and not in external administration. Writing to the wrong company, or to one in liquidation, is how that fee gets written off.
On Firmbrief Demands, a company debtor blocks approve until you've confirmed you checked that extract. An individual skips the gate.
How much, and which invoices?
The amount, what it's for, and the documents. If they email a pile of invoices, the intake should make them attach those, not recite them from memory. That's the re-keying a letter of demand usually hides.
When did time start, and did it restart?
A simple contract claim generally can't be brought after six years: Limitation of Actions Act 1958 (Vic) s 5(1)(a). An acknowledgment or part payment can restart it under s 24(3). So you want the date it fell due, and the date of any later payment or written acknowledgment. Flag it. Don't assume it's still in time.
Can you add your costs?
Only if there's a contractual right, like a costs clause in their terms. The VLSB fact sheet Letters of demand: traps for lawyers (2015) says demanding legal costs without that right may breach Conduct Rule 34. Check the clause before a dollar figure for costs goes in.
Will you actually sue?
The ACCC and ASIC debt collection guideline (April 2021) says you must not threaten action you aren't allowed to take, don't have instructions for, or don't intend to take. If the client has already said they won't sue over a small invoice, "we may commence proceedings" doesn't belong in the letter. Ask before you draft, and write to the answer.
Questions on this
Why get an ASIC extract before a letter of demand to a company?
To confirm the exact registered name and ACN, and that the company is still registered and not in external administration. Clients often know the trading name, not the entity.
Can I add legal costs to a Victorian letter of demand?
Only if the client has a contractual right to those costs. The VLSB fact sheet says demanding them without that right may breach Conduct Rule 34.
Can a letter of demand threaten court proceedings?
Only if you are permitted to take that step, you have instructions, and you intend to take it. The ACCC and ASIC debt collection guideline says not to threaten action you will not take.
What is the limitation period for a simple contract debt in Victoria?
Six years, under section 5(1)(a) of the Limitation of Actions Act 1958. An acknowledgment or part payment can restart the clock under section 24(3).
The longer checklist, with the same sources set out, is letter of demand checklist for Victorian lawyers.
Sources: VLSB, Letters of demand: traps for lawyers (2015); ACCC and ASIC, Debt collection guideline (April 2021); Limitation of Actions Act 1958 (Vic) s 5; ASIC registers.