A letter before action or letter before claim is a formal letter requesting payment of money owed to a business. It contains a warning that court action will be the next step taken to recover the debt.

If your business is overdue money from another organisation and attempts to obtain payment have not been successful, a letter before action should be sent before you commence a legal claim through the courts. In fact, it is often the case that a letter before action will prompt the debtor to pay to avoid the time and expense involved in litigation.

Sending a letter before action

A letter before action should contain specific information about the debt, including the following:

• The full name and address of the debtor;
• Details of whether they are a partnership, limited liability partnership or limited company;
• The amount outstanding;
• How the debt has arisen;
• Any interest or other charges that are due;
• A copy of the agreement under which the debt arose, or information about a verbal agreement that was made;
• Confirmation that the debt is overdue;
• Notification that court action will be commenced if payment is not made within seven days;
• Information as to how the debt can be paid;
• An address for a response.

Copies of outstanding invoices should be attached together with a formal financial statement, a reply form and an information form.

The letter will generally be sent by first class post, with the debtor given 30 days to reply.

Sending a solicitor’s letter before action

If a letter before action is sent by your solicitor, it can have a stronger impact on the debtor than a letter sent directly by your business. The fact that a solicitor is involved will emphasise the fact that you have instructed someone to deal with the debt on your behalf and is a clear signal that you intend to proceed to collect the debt.

At Witan Solicitors, we can send a solicitor’s letter before action on your behalf, including the necessary accompanying forms and information for the debtor. We can advise you on the next steps to be taken and work to obtain payment on your behalf without the need for litigation. Any letter sent by us would comply with the Civil Procedure Rules and in particular the Pre-Action Protocol for Debt Claims (https://www.justice.gov.uk/courts/procedure-rules/civil/pdf/protocols/debt-pap.pdf)  as well as the Practice Direction on Pre-Action Conduct and Protocols (https://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct).

Next steps

Once the debtor has received the letter before action, they can request additional information but should respond within the 30-day deadline. They can also make an offer to pay by way of instalments or raise a defence.

As a creditor, you should allow at least 30 days for a formal reply, or longer if more information has been requested. This period is in compliance with the government’s pre-action protocol for debt claims.

If the debt is disputed, the parties are generally required to try and resolve the issue by way of alternative dispute resolution, such as discussion and negotiation or mediation. It may also be possible to agree on a schedule of payment. For more information, see our article on commercial dispute resolution.

As a last resort, you can commence court proceedings to recover the debt. If an agreement is reached, but the debtor still fails to pay, then an updated letter before claim should be sent in compliance with the protocol before litigation is commenced.

If the court’s guidelines are not followed, the court can take this into account when making an order.

Contact us

At Witan Solicitors, we can advise you in respect of debt recovery and dispute resolution. We can write a letter before action and send it on your behalf, which could increase the likelihood of you being paid. We can also advise you on subsequent steps, including negotiation with the debtor and commencing a court claim.

If you are experiencing difficulties in obtaining payment and you would like to speak to one of our expert debt recovery solicitors in Birmingham, Northampton and London, email us at info@witansolicitors.co.uk or get in touch using our contact form.