A letter before claim is a formal notice from a creditor warning that they may apply to the court to recover a debt if it is not resolved. Receiving one does not mean court action is certain, but it does mean a creditor wants the matter dealt with and you need to respond. The sooner you act, the more options you will have.

If you have received a letter before claim, get free, confidential debt advice from National Debtline before you reply.

What is a letter before claim?

A letter before claim, sometimes called a letter of claim or letter before action, is a written notice telling you that a creditor intends to start court proceedings if the debt is not dealt with. Before starting a county court claim, creditors are generally required to send this letter first.

This requirement comes from the Pre-Action Protocol for Debt Claims, which sets out the steps both parties should follow before a case goes to court. The intention is to give you a genuine opportunity to respond and try to resolve things without court involvement. In the Pre-Action Protocol for Debt Claims, this letter is referred to as a ‘letter of claim’. In this article, we use the term ‘letter before claim’, as this is a commonly used phrase and helps describe the purpose of the letter more clearly.

For more detail on the steps creditors must follow before making a claim, read our guide to the Pre-Action Protocol for Debt Claims.

Why have I received a letter before claim?

A letter before claim usually arrives after earlier attempts to contact you have not resulted in the debt being repaid. For example, this might follow missed payments on a loan, credit card, overdraft, or an unpaid bill.

By this stage, the creditor will typically already have written to you or tried to reach you through other means. This letter is a step up from that earlier contact and it signals they are prepared to take the matter further if nothing changes.

If you are being chased for payment, our debt collection guide explains what creditors and debt collectors can and cannot do.

What should a letter before claim include?

Under the Pre-Action Protocol, there are specific things a letter before claim must contain. These are designed to give you enough information to understand the debt and respond properly. The letter before claim must include:

• the total amount being claimed, including any interest or charges added so far;
• details of the original agreement the debt relates to;
• a statement of accounts showing how the debt has built up over time;
• information about whether further interest or charges will be added;
• a reply form for you to complete and return;
• a financial statement form so you can set out your income and expenditure; and
• details of free debt advice services.

If anything appears to be missing from the letter, make a note of it when you respond.

How long do you have to respond to a letter before claim?

The Pre-Action Protocol gives you 30 days to respond, starting from the date the letter was sent.

If you need longer, for example to get debt advice or gather paperwork, you can ask for more time. Creditors should agree to a reasonable extension, particularly if you explain that you are seeking advice. 

What to do if you receive a letter before claim

There are some important steps to take if you receive a letter before claim.

• Check the details. Go through the letter carefully. Make sure the debt is yours and that the amount looks right. Although mistakes are uncommon, they can happen. If anything does not look right, raise it with the creditor and ask for clarification or evidence.
• Get free debt advice before you reply. It is worth speaking to one of our debt advisers. They can help you check the debt, work out what you can afford, and figure out the most appropriate way to respond.
• Complete the reply form. Use the form included in the letter to set out your position. Even if you do not pay the full amount right now, it is important to reply.
• Fill in the financial statement. This sets out your income and outgoings and shows what you can realistically afford to pay. Be as accurate as you can – any payment arrangement you agree needs to be realistic and affordable.

How to respond to a letter before claim

The reply form is your chance to tell the creditor where things stand. You can use it to confirm you owe the debt, dispute it, or set out your financial situation and propose a repayment arrangement.

If you want to set up a repayment plan, base the offer on what you can genuinely afford each month, not what you think the creditor wants to hear. An income and expenditure statement, often called a budget, is the standard way to show this. If you offer an amount you can’t afford and then miss payments, you will be back to square one.

If you are not sure whether a repayment plan is right for you, read our Ways to clear your debt guide before making an offer.

If you are disputing the debt, set out your reasons clearly and ask the creditor to provide any documentation they are relying on.

What happens if you ignore a letter before claim?

If you do not respond, the creditor is likely to make a county court claim, which could lead to a county court judgment (CCJ) being made against you. This is a court order requiring repayment of the debt.

A CCJ stays on your credit file for six years and can affect your ability to get credit, a mortgage or in some cases, a rental agreement. If it remains unpaid, the creditor may then apply for enforcement, for example, an attachment of earnings order that takes money directly from your wages, or a charging order on a property you own. Not responding does not make the debt go away, it just removes your ability to influence what happens next.

Our guide to court action by creditors explains what may happen if a creditor starts a claim.

Can you stop court action after receiving a letter before claim?

In many cases, yes, you can stop court action after receiving a letter before claim. Creditors are not required to go to court, and many would rather avoid it if the debt can be resolved another way. If you put forward a repayment proposal that reflects what you can afford, there is a reasonable chance the creditor will accept it without issuing a claim.

This is one of the reasons getting debt advice before you respond is so worthwhile. An adviser can help you put together something that is based on your actual financial situation rather than a figure you have arrived at under pressure.

If you are dealing with several debts or feel unsure where to start, our guide to Becoming debt free can help you think about your longer-term options.

What if the debt is not yours or is very old?

If you do not recognise the debt, say so in your response and ask the creditor to provide evidence, such as a copy of the original credit agreement. If a creditor continues to chase you after you have disputed the debt, you may be able to complain about your creditor.

If the debt is old, it may be statute barred. In England and Wales, most debts become statute barred after six years where no payment or written acknowledgment has been made and no court action has been taken. If you think this might be relevant to your situation, contact us for advice before you contact the creditor. Making a payment or acknowledging the debt in writing could restart the limitation period, so it is important to understand where you stand first. Read our guide to statute barred debts for more information on time limits for debts in England and Wales and what to do if creditors are chasing old debts.

How a letter before claim can affect your credit

The letter itself does not appear on your credit file. However, the debt it relates to may already be recorded there, and any missed payments are likely to have had an impact on your credit rating already.

If the CCJ is issued, it will show on your credit file for six years. Paying it within one month of the judgment date means it can be removed from the register.

Read our Credit reference agencies guide for more information.

How to get free debt advice

Get free debt advice from National Debtline before you reply. Our debt advisers can check whether the debt is valid, help you understand your rights under the Pre-Action Protocol, and support you in putting a response together. National Debtline offers free and confidential advice by phone and through our website. You can also use our self-help tool My Money Steps at any time of day. The earlier you get advice, the more you can do about the situation.