Letter · Debt Recovery & Civil Enforcement
Demand on a guarantor under a personal guarantee (letter)
Letter making formal demand on a guarantor after the principal debtor defaults: identifies the guarantee, the default and the amount, meets the guarantee's own demand conditions and stays inside the ACCC and ASIC debt collection guideline.
- Kind
- Letter. A letter or email you adapt and send.
- Where it applies
- Australia
- AI use
- Yellow AI can help in set ways. A lawyer checks specific points before use.
- Law stated as at
- 18 October 2026
- Status
- Maintained. Checked on 18 October 2026 against the 3 authorities it cites, for Australia.
- Version
- 1
- Source
- Written for this library
When to use it
Use when a trade or finance customer has defaulted and a director or other person has guaranteed the debt, and the guarantee requires (or it is prudent to make) a written demand before suing the guarantor. Read the guarantee first: its demand, notice and limitation clauses decide what this letter must say and how it is served.
Used for these tasks
Each task page says how far AI may help with the task and what the lawyer must review.
How AI may be used
AI may fill the letter from the guarantee, the account and the default history; a lawyer checks the guarantee's demand conditions, the amount, any liability cap and the tone before it is sent.
AI may
- Extract the parties, date, guaranteed obligations, demand clause, notice clause and any liability cap from the signed guarantee
- Populate the schedule of unpaid invoices from the ledger and total it, with a separate interest line
- Flag any guarantor who has said they are represented, have disputed liability or are in financial difficulty, so the letter is held
AI must not
- Must not state an amount above any cap or outside the obligations the guarantee actually covers
- Must not threaten bankruptcy, legal proceedings, credit listing or contact with family or employers unless the client has instructed that step and it is lawfully available
- Must not send the letter, or any follow-up, direct to a guarantor who is known to be legally represented
The lawyer checks
- The guarantee is signed, dated and covers this debt, and any precondition (demand on the principal, notice period, method and address for notices) has been met
- The amount demanded reconciles to the ledger and the guarantee: principal, interest rate source, costs only if the guarantee allows them, and any cap applied
- Whether the guaranteed contract is a regulated consumer credit contract, which brings in National Credit Code guarantor protections
- Whether the principal debtor is under external administration or bankrupt, and that the letter says nothing inconsistent with that process
Method: how the Green, Yellow and Red levels are decided. This is guidance for planning, not legal advice.
Read the full text
The full text is for signed-in accounts. It is free. When you sign in you can:
- read the whole precedent, with its drafting notes beside it;
- copy it, or download it as a Word file or Markdown;
- add it to your firm’s knowledge base, so colleagues can find it;
- let the AI tools you connect read it from that knowledge base.
The summary, the law it rests on and the AI-use guidance above stay public. Privacy.
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All precedents for Debt Recovery & Civil Enforcement · Tasks and AI use in this area