Debts are a common problem that can arise between individuals, individuals and companies or companies and other companies.
Unpaid debts can affect any individual or business, eating up time and resources and directing attention away from important business or personal life matters.
Debts cannot always be resolved amicably and can progress inevitably towards court cases where action is not taken by the alleged debtor.
Collecting debt via a court case, whether small claims or otherwise, is the last resort. Prior to this, you will need to issue a letter before claim, also known as a letter before action.
A letter before claim/action informs the other party of the disputed debt, warning them that court proceedings are imminent if the debt is not settled.
In many cases, the presence of a solicitor-prepared formal letter before claim is enough to encourage a settlement out of court.
What is a letter before claim?
Before taking an unpaid debt to court, you must issue a letter before claim or letter before action.
The letter before claim is a formal letter that outlines the debt and requests payment. If payment is not settled in a given reasonable timeframe then court action will be taken.
The debtor will usually be given 7 to 28 days to settle the payment. The letter before action is not an option – it must be sent prior to a court case taking place.
In the majority of cases, a properly written and prepared letter before claim will result in the debt being settled out of court.
Why do I need to write a letter before claim?
A letter before claim is a formal letter that shows a debtor that you intend to take them to court for an unpaid debt.
In many cases, a letter before claim circumvents the need for court. It shows that you’re serious about recovering this debt and have already been in contact with solicitors.
Waldrons Solicitors will help you formulate an effective letter before claims. This will improve your chances of recovering the debt without going to court whilst ensuring that you follow legal protocol.
What do I write in a letter before claim?
Firstly, the letter must be headed ‘letter before claim’ or ‘letter before action’. This shows that it’s a formal letter.
The letter must contain specific details of the claim and the rationale behind the dispute. This information is called the Pre-Action Protocols.
The Pre-Action Protocols will be considered by the court and are legally consequential.
What are the pre-action protocols?
At a very minimum, a letter of claim must contain:
● Your name and address
● A summary of the issue and its timeline
● Documents of any agreements, invoices, receipts and other evidence of the debt
● Documents you require from the opposing party
● How you would prefer the issue to be resolved
● How much money you’re recovering/expect to be repaid
● A deadline for a reply – usually 7 to 28 days
● A statement saying you’re prepared to go court if the debt is not settled
It’s best for a solicitor to prepare the Pre-Action Protocols. A qualified solicitor will ensure that the letter of claim is properly written and contains the correct information.
This will increase the likelihood of the claim being settled before court. Pre-Action Protocols have legal ramifications – a poorly written letter of claim with incomplete Pre-Action Protocols may scupper your chances of winning the case.
As Justice.gov states, failure to comply with the relevant Pre-Action Protocols will be taken into account by the court and may result in costs and penalties. The Pre-Action Protocol is both a legal and time/cost-saving exercise, hence why professional formulation is essential.
If the dispute does go to court, the Pre-Action Protocols will speed up the case considerably, reducing costs for both parties. It’s in the interests of both parties to act professionally and establish a cooperative line of communication prior to court.
How do I get help for writing a letter before action?
Letters before action should be created with the assistance of a solicitor.
Waldrons Solicitors can create detailed and effective letters of action that meet the required legal standards. In many cases, a properly formulated letter of action backed by a solicitor will encourage the alleged debtor to settle the issue outside of court.
Waldrons Solicitors have a specialist debt recovery team dedicated to recovering debts as quickly and efficiently as possible. We assist both individual and company clients with debt recovery claims.
We will assist with the letter of claim and Pre-Action Protocols and are fully equipped to represent you in court.