What is Letter Before Action (LBA)?
A Letter Before Action is a formal written demand sent to a debtor before taking them to court, following the pre-action process that applies to the claim.
A Letter Before Action (LBA), also called a letter before claim, is a formal written demand sent to a debtor before initiating court proceedings. In England and Wales, the Debt Claims Protocol specifically applies when a business creditor claims from an individual, including a sole trader. Other disputes may follow another protocol or the Practice Direction on Pre-Action Conduct.
- **Why LBAs are important:**
- Part of pre-action conduct: - Courts may take non-compliance with the applicable process into account
- Creates a final opportunity to resolve the debt: - The recipient can pay, explain a dispute or propose a payment plan
- Shows reasonableness: - Demonstrates to the court that you tried to resolve the dispute before litigation
- Establishes timeline: - Creates a clear record of when the debtor was given a final chance to pay
What an LBA must include: 1. The amount owed and how it was calculated 2. Any interest claim and its basis - including statutory interest only where the debt is eligible 3. Any fixed compensation claimed - £40, £70 or £100 only where the statutory commercial-debt scheme applies 4. Original agreement details - invoice numbers, dates, description of work 5. Response deadline - 30 days where the Debt Claims Protocol applies; otherwise use the applicable timetable 6. Payment details - how and where to pay 7. Alternative dispute resolution - mention of mediation or the Small Business Commissioner 8. Clear statement that court proceedings will follow if not resolved
How to send: Follow the delivery method in the applicable protocol. For Debt Claims Protocol cases, post the letter to the individual's address and also use additional contact details they have provided where appropriate. Keep a copy and evidence of sending.
After sending: If the matter is resolved within the applicable response period, no claim is needed. If it is not resolved, complete the remaining pre-action steps before deciding whether to file. If the amount is disputed, consider negotiation or mediation before court.
Examples
A graphic designer checks that a £2,500 business debt is eligible before including fixed compensation and statutory interest in an LBA
A builder checks the applicable pre-action process before sending a Letter of Claim about an £8,000 homeowner dispute
A freelance writer's LBA results in immediate payment from a publisher who had been ignoring invoices for 4 months
Related Terms
Pre-Action Protocol
Pre-Action Protocols are steps the court expects parties to take before starting legal proceedings, including sending a Letter Before Action and considering mediation.
Money Claims Online (MCOL)
Money Claims Online (MCOL) is the UK government's digital service for making court claims to recover money owed, typically for unpaid invoices under £100,000.
Statutory Late Payment Interest
Eligible UK commercial debts may qualify for statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998.
Debt Recovery
Debt recovery is the process of pursuing payment of overdue invoices, ranging from informal chasing through to formal legal action.
County Court Judgment (CCJ)
A County Court Judgment is a court order confirming that a person or business owes a debt, which severely impacts their credit rating for up to 6 years.
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