LITIGATION: Debt Recovery and the Letter of Claim

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Have you provided services and struggled to obtain payment after chasing them repeatedly?

Has a company agreed to provide services and after several delays has either not delivered, or
provided services that were not agreed upon?

As an individual, or business, it’s important you get paid for the service you provide or get the
service you paid for.

For a business, lack of payment potentially impacts cashflow.

Litigation is the legal process of obtaining what is due to you. Legal Peace will help you achieve
this.

There are two methods of achieving this:
1. Simple settlement at the start of the process (Preferred)
2. Legal process through the courts (Lengthy & expensive)

The start of any claim will be the Letter of Claim but what is it?

Stage 1: The Letter of Claim

What is a Letter of Claim?

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A letter of claim, (also known as a 'letter before claim’ and previously known as a ‘letter before action’), is the first stage of any litigation case.

It is a simple way to try and resolve the case outside of court to minimise costs for the claimant and the debtor.

A letter of Claim is sent to the debtor as a final warning, requesting payment of any outstanding sums and a warning of legal action if ignored.

In most cases, it is enough to either resolve the issue or at least open up communication and negotiation between the parties involved.

Why is a Letter of Claim needed?

If a dispute does lead to litigation (option 2), the court will expect the parties involved to have followed the relevant pre-action process.

The court will consider non-compliance when giving directions for the management of proceedings and when making orders for costs.

How long does a defendant have to respond to a letter of claim?

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Normally, defendants should respond within 14 days of receiving the Letter of Claim. If they are sole traders, they can be given up to 30 days.

Failure to do so will be taken into account by the court and sanctions may be imposed unless there are good reasons.