Default Notices and Letters of Demand: Getting the Timing and Content Right

Published 2 October 2026

Introduction

A letter of demand is often the sender’s first step when money remains unpaid, but it is not the same as a statutory default notice or court document. A creditor writing a letter must distinguish an ordinary demand letter from notices that may support debt collection, litigation or court proceedings.

Timing and content matter for private lenders, mortgage funds and other creditors who may need advice from private lender and non-bank finance lawyers.

This article explains when to send a letter of demand, what a default notice should contain, how proof of delivery supports recovery action, and when to seek legal advice before pursuing payment.

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Complying with the Property Law Act Requirements

Under section 114 of the Property Law Act 2023 (Qld), a mortgagee must not exercise a power of sale unless:

• a default has occurred; and
• the mortgagor has received a notice stating the nature of that default.

The notice must require the default to be remedied within 30 days after it is given.

A letter of demand may request payment, but it should not be treated as a substitute for this statutory notice. The mortgagee must also be able to show that the default remained unremedied after the 30-day period before exercising the power of sale.

Meeting National Credit Code Requirements

Section 88(1)–(3) of the National Credit Code — Schedule 1 to the National Consumer Credit Protection Act 2009 (Cth) — requires a credit provider to give a default notice before beginning enforcement action for a regulated credit contract. The notice must:

• contain the prescribed information; and
• allow the debtor at least 30 days to remedy the default.

The prescribed content is addressed by Regulation 86 of the National Consumer Credit Protection Regulations 2010 (Cth). For contracts or mortgages entered into on or after 1 March 2013, the notice generally uses Form 12A, which includes information about:

• the default;
• hardship assistance; and
• available dispute resolution processes.

Meeting Credit Reporting Privacy Standards

A credit provider must follow a separate process before listing default information with a credit reporting body. Specifically, section 9(3) of Schedule 2 to the Privacy (Credit Reporting) Code 2025 (Cth) requires the provider to:

• send a section 6Q of the Privacy (Credit Reporting) Code 2025 (Cth) notice to the individual’s last known address; and
• send a separate section 21D(3) of the Privacy (Credit Reporting) Code 2025 (Cth) notice at least 30 days later, warning that the provider intends to disclose the default.

The provider must wait at least 14 days after giving the second notice before making the listing.

The overdue payment must also have remained unpaid for at least 60 days and be at least $150, as required by the Privacy (Credit Reporting) Code 2025.

Contractual Notice Periods and Acting Prematurely

The Mandatory 30-Day Notice Period

Enforcement action may need to wait until the applicable notice period expires. The 30-day notice requirements under section 88(1) of the National Credit Code and section 114(1) of the Property Law Act 2023 are discussed above. Section 114(2) of the Property Law Act 2023 applies despite any agreement to the contrary, meaning parties cannot contract out of it.

Misrepresenting the Legal Status of a Debt

A letter of demand must accurately describe the debt, the creditor’s rights and any proposed litigation. The Debt collection guideline: for collectors and creditors (ACCC/ASIC, RG 96) states that threatening legal action when proceedings are not possible, intended, under consideration or authorised may amount to misleading or deceptive conduct. The same risk arises when a sender presents an ordinary demand letter as court documents or suggests that legal action has already begun when it has not.

A statute-barred debt requires particular care. The Debt collection guideline states that representing that legal action will or may be taken when a limitation defence applies may be misleading or deceptive, and may also be unconscionable. A creditor should confirm the debt’s legal status before sending a demand letter that threatens court proceedings.

Avoiding Unconscionable Conduct and Undue Harassment

Premature recovery action can create risks beyond an ineffective notice. Sections 50 and 21 of the Australian Consumer Law — Schedule 2 to the Competition and Consumer Act 2010 (Cth) — prohibit physical force, undue harassment, coercion and unconscionable conduct. Sections 12DJ and 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) contain corresponding protections for financial services.

A debt collector must not enter private residential property to take possession of secured goods unless a court order authorises entry or the occupier gives the required written consent. Section 99 of the National Credit Code and Regulation 87 of the National Consumer Credit Protection Regulations 2010 set out requirements for entry under a regulated credit contract. Repeated demands, aggressive contact or pressure while a dispute is being investigated may also amount to undue harassment.

What a Notice Must Contain to Trigger Enforcement

Specifying the Nature of the Default and Required Remedies

Consistent with the Section 114(1) Property Law Act 2023 and section 88(3) National Credit Code requirements described earlier, a demand letter should:

• identify the unpaid amount or other breach;
• explain the action required to remedy the default; and
• state the date by which the remedy must occur.

Mandatory Statutory Forms and Dispute Resolution Details

Under Regulation 86 of the National Consumer Credit Protection Regulations 2010, a notice given on or after 1 December 2013 for a relevant contract or mortgage entered into on or after 1 March 2013 must include the Form 12A information described earlier.

In addition to that prescribed information, section 88(3) of the National Credit Code requires the notice to provide details of:

• the credit provider’s internal dispute resolution and financial hardship processes; and
• the external dispute resolution procedures available through the Australian Financial Complaints Authority.

These details should be clear and easy for the debtor to locate.

Hardship Assistance Information

Form 12A also requires the notice to tell the debtor how to contact the credit provider about financial hardship assistance. It explains that the debtor may request changes to the contract, such as:

• changing the amount or timing of repayments;
• extending the contract term; or
• delaying payments for a set period.

The notice should also explain that a refusal must be provided in writing and may be reviewed through the Australian Financial Complaints Authority.

Resource material records that enforcement action may be put on hold while that complaint is considered. It also records that a debtor may still apply to a court if dissatisfied with the outcome.

Common Drafting Errors That Delay or Invalidate Enforcement

Failing to Send Notices to the Last Known Address

A notice sent to an incorrect or outdated address may not satisfy the notice requirements for a default listing. The section 6Q and section 21D(3) of the Privacy (Credit Reporting) Code 2025 (Cth) notices required by section 9(3) of Schedule 2 to the Privacy (Credit Reporting) Code 2025, discussed above, must be sent separately to the individual’s last known address at the time of despatch.

Resource material states that a default listing may not be valid if the creditor mistakenly sends both notices to an old address that was not the last known address. A creditor should retain proof of delivery and records showing why the address used was the last known address.

False Representations About Legal Action

A demand letter must accurately describe the creditor’s rights and the consequences of non-payment. The Debt collection guideline cautions against suggesting:

• that court proceedings have started;
• that unsecured goods may be seized; or
• that legal action will follow when proceedings are not possible, intended or authorised.

In addition to the unconscionable conduct and undue harassment protections discussed above, section 18 of the Australian Consumer Law prohibits misleading or deceptive conduct, and section 12DA(1) of the ASIC Act contains a corresponding protection for financial services.

Omitting Required Information Under the National Credit Code

A default notice may be defective if it omits information required by the National Credit Code or the National Consumer Credit Protection Regulations 2010. In addition to the section 88(3) of the National Credit Code prescribed information and the Form 12A content discussed above, the notice should state:

• the amount required to remedy the default;
• the relevant deadline; and
• the available hardship and dispute resolution information.

Reservation of Rights Versus Formal Default Notices

Utilising Informal Collection Activities Before Court Action

An ordinary letter of demand can be used to request payment, clarify the amount claimed and open negotiations before court proceedings. In addition, the Debt collection guideline supports a flexible approach directed towards meaningful and sustainable repayment arrangements that account for the debtor’s living expenses and financial position.

Writing a letter or making contact must serve a reasonable purpose. In doing so, a sender should:

• accurately describe the debt and possible consequences of non-payment;
• not threaten litigation that is not possible, intended, authorised or under consideration; and
• document any agreed repayment arrangement, provided to the debtor on request.

Issuing Formal Default Notices to Commence Legal Recovery

A reservation of rights or demand letter does not replace a statutory default notice where legislation requires one, so private lenders should seek advice from private lender enforcement and debt recovery lawyers before commencing recovery action. The relevant statutory requirements, discussed above, include:

• under section 114(1) of the Property Law Act 2023, a notice stating the nature of the default and requiring it to be remedied within 30 days before a power of sale is exercised; and
• for a regulated credit contract or mortgage, section 88(1)–(3) of the National Credit Code requires a default notice containing prescribed information and allowing at least 30 days to remedy before specified enforcement action begins.

Managing Disputed Debts and Suspending Collection Activity

Collection activity, including credit reporting, should be suspended when a debtor disputes identity, liability or the amount claimed. The Debt collection guideline states that the claim should be properly investigated before recovery activity resumes.

The creditor should provide relevant account information and documents without unreasonable delay. Section 9(1) of Schedule 2 to the Privacy (Credit Reporting) Code 2025 also prevents default information from being disclosed while a hardship request is being decided, or until at least 14 days after the provider notifies the individual that the request has been refused.

A syndicate lender should keep records of the dispute, investigation and communications before sending a further letter of demand or commencing litigation.

Conclusion

A creditor’s letter of demand should be separated from statutory notices that trigger enforcement rights, with timing, content, delivery and dispute handling checked before recovery action begins. Section 114(1) of the Property Law Act 2023 and section 88(1)–(3) of the National Credit Code impose specific notice requirements, while the Privacy (Credit Reporting) Code 2025 governs default listings.

With these requirements in mind, contact GRM LAW’s private lender enforcement and recovery lawyers in Queensland before you send a letter of demand or commence litigation. Our private lenders and non-bank finance lawyers in Queensland can review your documents, assess proof of delivery and help reduce avoidable problems during debt collection and court proceedings.

Frequently Asked Questions

Disclaimer: This is general information only and is not legal advice. For advice on your circumstances, contact GRM LAW.