Letter Before Action for Debt: What It Means and What to Do

What is a letter before action?

A letter before action is the common name for a final warning sent before a creditor takes you to court. For consumer debts in England and Wales it is usually called a letter of claim under the Pre-Action Protocol for Debt Claims. Debt collectorsDebt Collection in the UK: What You Need to KnowUnderstand how debt collection works in the UK, what debt collectors can and cannot do, and how to protect yourself if you are being chased for a debt.Read more →, debt buyers and solicitors acting for them all send them.

The letter is not a court document. Nothing has been filed, no judgment has been made, and there is no legal order against you. It is the last step before a claim form.

What the letter should contain

Where the protocol applies, a proper letter of claim should include:

• The amount owed, with a clear breakdown of the balance, interest and charges
• The name of the original creditor and how the debt is made up
• Who now owns the debt, if it has been sold or assigned
• How you can pay, and how to contact the creditor
• An information sheet, a reply form and a form for setting out your income and spending

Step 1: Check it is genuine and the debt is yours

Before you reply, check the sender. Look the company up on the FCA Financial Services Register, and compare its details with the letter. Our guide explains how: is this debt collection letter a scam?

Then ask yourself whether you recognise the original creditor and the account, and whether the amount looks right. If anything is wrong, or you do not recognise the debtI Don't Recognise This Debt: What to Do If a Collector Contacts You (UK)Don't recognise a debt a collector is chasing? Learn how to dispute it, what proof to ask for and how to check for fraud or a scam.Read more →, tell the sender in writing that you dispute it.

Step 2: Note your deadline

Under the Pre-Action Protocol for Debt Claims, the creditor should allow you at least 30 days from the date of the letter to respond before it can start a court claim. Put the date in your diary and aim to respond well before it.

In Scotland and Northern Ireland the rules and wording differ. In Scotland, for example, claims go to the sheriff court under simple procedure. The advice is the same, though: respond promptly and get advice early.

Step 3: Ask for any missing information

If you are unsure about the debt, you are entitled to ask questions before you decide how to respond. You can ask for:

• A statement of account showing how the balance is made up
• A copy of the credit agreement. For most regulated credit agreements you can request this by writing and sending a £1 fee, and the creditor normally has 12 working days to reply
• Proof that the company owns the debt or acts for the owner, if it was sold

Step 4: Choose how to respond

You normally have four choices. Which is right depends on the facts of your case.

Step 5: Do not ignore it

Ignoring a letter before action does not make the debt go away. Once the deadline passes, the creditor can ask the court to issue a claim. If that claim is also ignored, the court can enter a judgment against you without hearing your side.

Step 6: If you cannot afford to pay

Free, independent help is available from MoneyHelper, StepChangeStepChange Explained: What It Does and How It WorksWhat the debt charity StepChange offers, how its free debt advice and debt management plans work, who it suits and what to expect when you contact them.Read more →, National DebtlineNational Debtline: How It Works, When to CallWhat National Debtline is, who runs it, what it can help with, how to get free advice by phone, webchat or online tools, and what to expect.Read more → and Citizens Advice. See our comparison of free debt advice charities. The priority and non-priority debts guide helps you decide what to pay first, and our debt-to-income calculator shows where you stand.

In England and Wales a debt adviser can also apply for Breathing Space, a legal pause of up to 60 days that stops most creditors taking action.

What happens if it reaches court?

If you do not respond and the creditor starts a claim in England or Wales, you will receive a claim form. You normally have 14 days to respond, and if you acknowledge the claim you generally have 28 days from service to file a defence. You can admit the debt and ask for time to pay, admit part of it, or defend the claim.

If a County Court Judgment (CCJ)County Court Judgment (CCJ)A County Court Judgment (CCJ) is a court order, made in England, Wales or Northern Ireland, saying you owe money and must repay it.Read more → is made against you, it appears on the public register and stays on your credit fileHow Credit Scores Work in the UKHow UK credit scores work: what the credit reference agencies record, what affects your score, why scores differ between agencies and what lenders actually see.Read more → for six years. If you pay it in full within one month of the judgment, it can be removed from the register. If you miss the deadline for a claim, you may be able to apply to set a judgment aside, so seek advice quickly.

In Scotland the process and paperwork are different, but the principle is the same: do not ignore court papers.