Letter Before Action: How to Demand Payment Before Going to Court

A Letter Before Action (LBA), also called a "letter before claim" or "letter of demand", is a formal letter sent to someone who owes you money. It is the final step before starting court proceedings.

The letter serves two purposes. First, it gives the debtor a clear, documented opportunity to pay before you involve the courts. Many debts are settled at this stage. Second, it fulfils your obligation under the Pre-Action Protocol for Debt Claims, which applies to most debt recovery claims in England and Wales.

The Pre-Action Protocol came into force in October 2017 and is issued under Part 1 of the Civil Procedure Rules (CPR). Non-compliance can lead to the court imposing costs sanctions, staying (pausing) your claim, or drawing adverse inferences.

You should send a Letter Before Action when:

• Someone owes you money and has failed to pay after informal reminders.
• An invoice is overdue and the debtor has not responded to follow-up requests.
• You are preparing to issue a county court claim (MCOL or Part 7 claim).
• A tenant, customer, or business partner has breached a contract involving payment.

There is no legal requirement to wait a specific period after the debt becomes due before sending an LBA, but you should have made reasonable attempts to resolve the matter informally first.

Under the Pre-Action Protocol, your Letter Before Action must include:

• The amount owed — the total debt, broken down if there are multiple invoices or charges.
• How the debt arose — a brief explanation (e.g. "unpaid invoices for services provided under our contract dated 1 January 2026").
• Any interest or charges claimed — if you are claiming contractual interest or statutory interest under the Late Payment Act.
• What you want the debtor to do — typically "pay the full amount within 30 days of this letter".
• A warning — that you will start court proceedings if payment is not received.
• An information sheet — for individual (non-business) debtors, you must enclose a copy of the standard information sheet about debt advice organisations.
• A reply form or financial statement — for individual debtors, you must include a standard financial statement form (or equivalent) to allow them to propose a repayment plan.

For business-to-business debts, the information sheet and financial statement are not required, but the other elements are still best practice.

The Pre-Action Protocol requires you to give the debtor 30 days to respond from the date of receipt of the LBA. During this period, the debtor can:

• Pay in full — the matter is resolved.
• Propose a repayment plan — you should consider any reasonable proposal. If you reject it, you should explain why.
• Dispute the debt — if the debtor says they do not owe the money (or not that amount), you should consider their response before proceeding.
• Request more time — in complex cases, the debtor may ask for extra time. You should agree to reasonable requests.
• Ignore the letter — if there is no response after 30 days, you can proceed to court.

You must not issue court proceedings before the 30-day period expires unless there is a genuine urgency (e.g. the limitation period is about to expire).

If the debt is a commercial (business-to-business) debt, you have a statutory right to charge interest under the Late Payment of Commercial Debts (Interest) Act 1998:

• Interest rate: 8% per annum above the Bank of England base rate.
• Fixed compensation: £40 for debts up to £999.99, £70 for debts between £1,000 and £9,999.99, and £100 for debts of £10,000 or more.
• Reasonable recovery costs: You can claim the costs of recovering the debt if they exceed the fixed compensation amount.

For consumer debts (owed by an individual, not a business), you can claim contractual interest if your contract includes an interest clause. If there is no contractual provision, you can ask the court to award interest at up to 8% per annum under Section 69 of the County Courts Act 1984.

If the debtor pays, the matter is resolved and no further action is needed. Keep records of the payment.

If the debtor proposes a repayment plan, consider whether it is reasonable. Accepting a reasonable plan is often better than the cost, delay, and uncertainty of court proceedings.

If the debtor disputes the debt, consider their arguments carefully. If the dispute has merit, you may need to negotiate or accept that the claim is weaker than you thought. If the dispute has no merit, you can proceed to court.

If there is no response after 30 days, you can issue a claim through Money Claims Online (MCOL) for debts up to £100,000, or by filing a Part 7 claim form (N1) at the county court for any amount.

This guide provides general legal information about UK law and is not legal advice. Laws and regulations change, and individual circumstances vary significantly. For advice specific to your situation, you should consult a qualified solicitor.

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