A debtor ignoring your letter of demand is frustrating — but it's also common. Many debtors ignore a first demand hoping the creditor will give up. The ones that do are wrong: across Australian B2B debt, recovery rates climb sharply once a creditor escalates beyond the first letter — see our analysis of debt recovery rates in Australia. Here's exactly what your options are.
Step 1: Send a follow-up (Day 7–14)
Wait 7 days from your original demand date before following up. At this point, send a second, firmer letter referencing the original demand and escalating your language:
- Reference the original letter and its date
- State that no response has been received
- Set a shorter final deadline (typically 7 days)
- State explicitly that you will take legal action if payment is not received
If you sent via SydneyCollect, our system sends a Day 7 and Day 14 reminder automatically.
Step 2: Assess the amount (Day 14)
The right escalation path depends primarily on the amount owed:
| Amount | Recommended path | Cost |
|---|---|---|
| Under $15,000 | NSW Civil and Administrative Tribunal (NCAT) or Local Court | Low filing fees |
| $15,001–$100,000 | Local Court (Small Claims Division) or debt recovery lawyer | Filing fee + legal costs |
| Over $100,000 | District Court or Supreme Court via solicitor | Significant legal costs |
| Any amount (company) | Statutory demand (wind-up threat) for debts ≥ $4,000 | Low cost, high pressure |
Option A: NCAT / Small Claims
For debts under $15,000, the NSW Civil and Administrative Tribunal (NCAT) is the lowest-friction path. No lawyers required, low filing fees, decisions are binding. The process takes 4–12 weeks on average.
Limitation: NCAT handles consumer disputes. For strictly B2B commercial debts, the Local Court's Small Claims Division (up to $20,000) is more appropriate. For a side-by-side comparison of when a letter of demand resolves a debt versus when small claims court becomes necessary, see our guide on letter of demand vs small claims court.
Option B: Debt recovery lawyer (Day 14+)
For debts over $15,000, or if the debtor is disputing the claim, engaging a specialist debt recovery solicitor is usually the most cost-effective path. A lawyer can:
- Send a formal solicitor's letter (often triggers immediate payment)
- File a Statement of Claim in court
- Apply for a default judgment if the debtor doesn't respond
- Enforce the judgment (garnishee orders, writ of levy)
At Day 14, our system automatically identifies a suitable debt recovery lawyer from our partner network and presents you with a referral option. No upfront fees — the lawyer works on a contingency or agreed-fee basis.
Option C: Statutory demand (companies only)
If the debtor is a registered company and owes more than $4,000, you can serve a statutory demand under the Corporations Act 2001. The debtor has 21 days to pay or dispute. Failure to comply creates a presumption of insolvency — which gives you the right to apply to wind up the company.
This is a powerful tool but must be used carefully. A technical error in the demand can invalidate it entirely. Use a solicitor.
What about a debt collection agency?
Agencies are best suited to high-volume, lower-value debts (under $10,000). They work on commission (typically 15–30%) and use persistent contact campaigns. They cannot sue on your behalf — they can only persuade. Compare agencies vs. lawyers →
The 2026 data: what silence usually means
Our 2026 Australian Debt Collection Report provides the underlying probability data for what happens next when a debtor ignores your demand. Section 8 reproduces CreditorWatch's default-to-insolvency probability ladder:
| Formal trade defaults recorded | Probability of business failure within 12 months |
|---|---|
| 1 default | 20–24% |
| 2 defaults | 42% |
| 3+ defaults | 62% |
Source: CreditorWatch Business Risk Index, cited in the 2026 Australian Debt Collection Report.
A debtor who has ignored your formal letter of demand is unlikely to be at zero defaults. Many will already be at the two- or three-default tier — meaning a 42% or 62% chance they will be in external administration within 12 months. The recovery-rate ladder in Section 8 shows that once a debt reaches formal insolvency, average unsecured-creditor returns are less than 5 cents in the dollar (AFSA data). A negotiated payment plan over 12 months returning even 30–50 cents is materially better than forced formal proceedings.
That is why escalation timing matters. Waiting another 30 days to "give them a chance" can move the debtor from the 1-default tier (20% failure probability) to the 3+ tier (62%). The right action sequence after silence is: escalate to a solicitor or statutory demand at day 14–21, not day 60.