How to Write a Letter Before Action in England and Wales

Work out which regime applies first

Paragraph 1.1 of the Debt Claims protocol is the test: it applies to any business — including sole traders and public bodies — claiming payment of a debt from an individual, and an individual includes a sole trader. It does not apply to business-to-business debts unless the debtor is a sole trader, and it does not apply where another protocol covers the debt, such as construction and engineering or mortgage arrears.

So a limited company chasing a consumer is in the protocol. A company chasing another company is not. An individual lending money to a friend is not. Getting this wrong at the start produces either a non-compliant letter or an unnecessarily slow one.

What a protocol letter of claim must contain

Paragraph 3.1 reads as a checklist and the courts treat it as one: the amount of the debt; whether interest or charges are continuing; the details of the agreement — for an oral agreement, who made it, what was agreed as far as possible in the words used, and when and where; for a written one, the date, the parties and a note that a copy can be requested; assignment details if the debt was bought; an explanation of why any instalment offer already made is not acceptable; how to pay; and the address for the Reply Form.

It must also enclose an up-to-date statement of account, or bring the figures up to date in the letter itself, together with the Information Sheet and Reply Form at Annex 1 and a Financial Statement form. Two mechanical rules complete the picture: the letter must be clearly dated at the top of the first page and posted the same day or the next, and it must be sent by post — email is an addition, not a substitute.

1. 1.Decide whether the Debt Claims protocol applies to your claimant and defendant.
2. 2.Set out the debt, its basis, the documents relied on and any interest, and bring the account up to date.
3. 3.For a protocol case, enclose the Information Sheet, Reply Form and Financial Statement, and allow 30 days from the date on the letter.
4. 4.For any other claim, allow a reasonable period — 14 days for a simple debt, longer for a complex claim.
5. 5.Propose a specific form of alternative dispute resolution rather than mentioning ADR in the abstract.
6. 6.Post it, keep proof, and do not issue proceedings before the period expires.

Interest: pick the basis you are actually entitled to

Contractual interest applies if the agreement provides for it, subject to the rate not being a penalty and, in a consumer contract, not being challengeable as an unfair term.

Statutory interest for commercial debts under the Late Payment of Commercial Debts (Interest) Act 1998 runs at 8% above the Bank of England base rate, with a fixed recovery sum of £40 for debts under £1,000, £70 between £1,000 and £9,999.99, and £100 at £10,000 and above. It applies only where both parties act in the course of a business.

Interest under section 69 of the County Courts Act 1984 — usually 8% — is awarded by the court in proceedings. It is claimed on the claim form, not demanded before issue, and a letter that adds it to the sum demanded overstates the debt.

The cost of getting it wrong

Paragraph 7.1 of the protocol says the court will expect compliance and will take non-compliance into account when giving directions, with the sanctions set out in paragraphs 13 to 16 of the Practice Direction: a stay while the missed steps are taken, an adverse costs order even against a successful claimant, and interest reduced or disallowed. The court looks for compliance in substance and ignores minor technical slips — but a 14-day letter with no Information Sheet in a protocol case is not a technical slip.

Limitation is the other trap. A simple contract claim must be issued within six years of the money falling due (Limitation Act 1980, section 5), and correspondence does not stop the clock. A written acknowledgment or a part payment by the debtor does restart it, which is a good reason to keep the email in which they promise to pay.