A Guide To Letters Of Demand For Outstanding Payment In Malaysia (+Templates)

A standard first step for debt recovery in Malaysia, a letter of demand for outstanding payment is a formal written notice asking someone to pay a debt or fulfill an obligation most commonly issued by three groups:

• the creditor directly

• a debt recovery agency, or

• a debt recovery lawyer

As readers likely fall into the first group, we are compelled to bring a key point to your attention. 

While all three can threaten legal action, only a lawyer’s letter carries real legal weight. 

Meanwhile, threats from creditors and agencies–forgive our bluntness–are more bark than bite.

The left one nibbles your fingers; the right one takes off your hand.

Luckily, as most debtors don’t know this, any letter can be enough to prompt repayment, in which case it doesn’t matter who sends it 🙂

But should a debtor ignore a letter, the sender suddenly becomes much more important.

Keeping that in mind, and because we want readers to walk away with actionable insights, our guide approaches letters of demand in two main situations:

• first-time debtors, and

• debtors who ignore multiple reminders or will likely be stubborn

Note: If you are confident in your plan, click here to skip to our demand letter templates.

Otherwise, let’s begin.

Letter of demand for first-time debtors

For readers wondering what Malaysian law says about letters of demand, there is no legal prescription for how many to send nor its contents.

The general goal is to secure payment with the least amount of pressure necessary, preserving goodwill and future opportunities to work together.

In short, don’t burn bridges right away, but be ready to play the Foo Fighters.

Or play it anyway, it's a good song.

Our recommendation

We suggest sending two letters:

1. Overdue payment reminder, and if ignored

2. Final payment reminder and notice of legal action

We explain why below, but for now, if you want to write your own, make sure they mention:

• debtor and creditor details 

• a clear description of what the debt is for

• when it was incurred 

• agreed terms

• amount owed

• payment deadline

• consequences of non-payment

• copies of the agreement or invoice (optional)

• previous reminders sent (optional) 

• any proof of partial payments (optional)

Otherwise, here’s what you really came for: Free templates you can fill in and immediately send via email–you’re welcome!

Overdue payment reminder template

Final payment reminder template

Why two letters?

Because in our experience, that’s enough to tell if a debtor intends to repay the debt. 

If the debtor ignores the two letters, successful debt recovery will likely need a bit more legal persuasion, so welcome to the second category of debtors!

Debtors who ignore multiple letters / stubborn debtors

If a creditor has grounds for debt recovery, a debtor who ignores letters of demand is likely:

• stalling to run out the six year statute of limitations

• in financial distress / already insolvent; or 

• under the impression they have grounds to contest the debt

Regardless, yet more letters of demand from a creditor is unlikely to lead to a different outcome.

We strongly advise creditors in this position to either escalate to legal action or write off the debt and claim it as a tax deduction.

If the creditor wishes to pursue legal action, this is the point to engage a debt recovery lawyer, who will then issue a formal Letter of Demand threatening proceedings.

Here’s an example of a letter sent by Rule & Co to a delinquent debtor (redacted to protect their identity):

Even with the redactions, it's quite clear this letter makes it very clear to the debtor that this is their final chance to repay, and once sent, one of two things usually happen:

1. The debtor capitulates and repayment negotiations begin, or

2. The debtor continues resisting and the lawyer escalates proceedings and/or files a civil suit to obtain a judgment

Once judgment is secured, the debtor faces significant penalties if they continue to withhold payment–an entirely separate topic we cover in our guide to debt collection laws in Malaysia!

Costs to engage a lawyer to issue an LOD

The Malaysian Bar prohibits lawyers from advertising prices to prevent clients from choosing purely based on cost rather than quality of service. However, feel free to get in touch with us for a free case assessment and quotation.

In any event, an LOD is just a small part of a broader debt recovery strategy, which usually includes pre-court negotiations, payment follow ups and legal escalation.

For readers looking to engage a professional, the best next step is to get in touch so we can guide you on the most effective approach.

Regardless, we wish you a smooth debt recovery process 🙂

Get in touch for a free debt recovery assessment

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If your reminders have been ignored or you simply don’t want the hassle of chasing payments, Rule & Co is a debt recovery law firm that helps creditors recover debts via legal strategies that minimize upfront cost, maximise recovery, and safeguard your reputation.