What happens if a debtor ignores a Letter of Demand in Singapore?

If a debtor ignores a Letter of Demand (LOD) in Singapore, it can trigger more serious legal consequences. A Letter of Demand is a formal notice sent to a debtor demanding payment of an outstanding debt within a specified timeframe—usually 7 to 14 days. While it’s not legally binding on its own, ignoring it signals unwillingness to resolve the issue and often leads to escalation.

Here’s what typically happens when a debtor ignores a Letter of Demand in Singapore:

1. Legal Action May Be Taken

A Letter of Demand is not just a warning—it’s a formal prelude to legal proceedings. If the debtor fails to respond or make payment within the timeframe stated (usually 7 to 14 days), the creditor may escalate the matter by filing a legal claim.

For smaller debts, they may file a claim with the Small Claims Tribunals (SCT), which handles disputes of up to S$20,000 (or S$30,000 if both parties agree). For larger amounts, the matter can be taken to the State Courts or High Court, depending on the complexity and size of the debt. If the debtor continues to ignore the case, the court may issue a default judgment in favor of the creditor. This legal ruling confirms that the debt is valid and owed.

2. Enforcements and Penalties Can Follow

Once a judgment is issued, the creditor can apply to enforce it. This can take several forms:

• Writ of Seizure and Sale: Debtor’s property may be seized and sold to recover the amount owed.
• Garnishee Order: Funds may be directly deducted from the debtor’s bank account or salary.
• Bankruptcy Proceedings: If the debt exceeds S$15,000, creditors can apply to bankrupt an individual.
• Winding Up: For companies, creditors can petition to liquidate the business to recover the debt.


These enforcement actions can have long-term consequences, such as asset loss, reputational damage, and financial restrictions.

3. Missed Opportunity to Negotiate

Ignoring a Letter of Demand often eliminates the chance to negotiate a reasonable solution. Many creditors are open to setting up installment plans or accepting partial payment as a settlement, especially before court action begins.

By not responding, the debtor gives up that opportunity and risks facing much harsher outcomes through the courts.

4. Negative Impact on Credit and Reputation

Legal action and judgments are part of the public record in Singapore. Being sued or declared bankrupt can affect your credit rating, your ability to borrow money, and your business credibility. Future lenders or clients may view you as a risk if they find a history of unpaid debts and legal disputes.

Ignoring a Letter of Demand doesn’t make the problem go away—it makes things worse. If you’ve received a demand, it’s important to respond promptly, whether you agree with the debt or not. If you’re the creditor, sending a Letter of Demand is often the first step toward structured, enforceable debt collection in Singapore.

How Debt Collectors can help?

In many cases, businesses engage debt collection agencies to recover debts on their behalf, and these agencies typically issue a formal Letter of Demand as the first step. When issued under the agency’s or a law firm’s letterhead, the LOD carries more weight and signals to the debtor that the matter is being handled seriously and professionally.

If a debtor ignores the Letter of Demand, the debt collector will usually escalate their recovery efforts. This could involve more frequent follow-ups, negotiating repayment plans, or warning of potential legal action. The LOD serves as the formal documentation that shows the creditor made a clear request for payment, making further collection steps more structured and legally defensible.

Additionally, if both the Letter of Demand and collection agency efforts are unsuccessful, the creditor may proceed with legal action. Many collection agencies either have in-house legal teams or work closely with lawyers, making it easy to transition from informal recovery efforts to court proceedings. In such cases, the LOD becomes an important piece of evidence, showing the debtor was given an opportunity to resolve the matter before litigation began.

A good LOD also enhances the credibility of the debt collector’s efforts. It emphasizes to the debtor that the situation is serious and that ignoring the demand could lead to significant legal consequences, such as a court judgment or damage to their credit standing. Furthermore, in Singapore’s legal context, the LOD helps establish that the creditor has made reasonable attempts to recover the debt, which is important for proceedings in the Small Claims Tribunals or civil courts.

In short, a Letter of Demand strengthens the debt collector’s position, adds legal weight to the recovery process, and increases the likelihood of prompt repayment or negotiation. It is a critical tool that connects informal collection efforts with potential legal action, making it an essential step in effective debt recovery.

At Swift Debt Recovery, we provide both well crafted Letter of Demand and debt recovery service. Working together to compel a debtor to settle outstanding payments. Contact us now!