If you are owed a debt of less than £10,000 and are considering recovery through the English Courts, specifically using the small claims track, the process is structured and begins with a crucial preliminary step: sending a letter before action. Understanding and executing this initial step effectively is key to setting a solid foundation for your claim.

What is a Letter Before Action?

A letter before action (LBA), sometimes also known as a "demand letter," is a formal notice sent to the debtor outlining your intention to initiate legal proceedings if the debt is not paid within a specified period. This letter serves multiple purposes:

• Notification: It informs the debtor of the debt, providing details such as the amount owed, the basis of the claim, and any interest or charges that may have accrued.
• Opportunity to Settle: It offers the debtor a final chance to settle the debt without involving the Court, which can save both parties time and legal expenses.
• Legal Requirement: Sending an LBA is a requirement under the Practice Direction on Pre-Action Conduct and Protocols, which aims to encourage parties to resolve disputes without litigation and, if litigation is necessary, to support the efficient management of proceedings.

The LBA should be clear and concise, providing all necessary information to understand the claim. It should also specify a reasonable deadline for payment, typically 14 to 30 days, and state explicitly that court proceedings will be commenced without further notice if the debt is not settled by the deadline.

Garfield can draft the LBA for you, saving you the time and trouble of having to do so yourself.

Steps After the Letter Before Action

1. Response from the Debtor:

• If the debtor pays the debt in response to the LBA, no further action is required.
• If the debtor proposes a repayment plan and you accept it, ensure that the agreement is documented.
• If the debtor disputes the debt, consider their grounds for dispute and decide if it still merits proceeding to court.

Garfield can help you with these steps, including drafting the relevant correspondence for you.

2. Filing a Claim:

• If there is no satisfactory response to the LBA, the next step is to initiate formal legal proceedings by filing a claim in the county court where the debtor resides or conducts business.
• This involves completing a Claim Form (Form N1), which Garfield can prepare and submit to Court for you. The form requires detailed information about the claim, including particulars of the debt, the amount being claimed, and any interest or costs. Garfield will populate this information on your behalf.

3. Court Fees:

• Filing a claim incurs a Court fee, which varies depending on the amount claimed but is recoverable from the debtor if you win the case.

4. Service of the Claim:

• Once the claim is filed, the Court will serve the claim form on the debtor, giving them a formal notice of the proceedings.

5. Response from the Debtor:

• The debtor has 14 days to respond to the claim. They can pay the claim, acknowledge it and request more time to respond, file a defence, or counterclaim.
• If the debtor does not respond, you can apply for a default judgment, which allows you to win the claim automatically.

6. Going to Court:

• If the debtor defends the claim, the case will proceed to a Court hearing. Both parties will have the opportunity to present their evidence and arguments.
• The hearing is relatively informal compared to higher court proceedings and is designed to be accessible to laypersons without legal representation.

7. Judgment and Enforcement:

• After the hearing, if the Court finds in your favour, it will issue a judgment ordering the debtor to pay the debt.
• If the debtor still does not pay, you may need to take further steps to enforce the judgment, using methods such as a warrant of control, attachment of earnings order, or a third-party debt order.

Conclusion

Recovering a debt of less than £10,000 through the small claims track starts with a well-crafted letter before action, serving both as a final notice to the debtor and fulfilling a legal prerequisite. If the debtor does not respond favorably, the process transitions into more formal legal proceedings, which can ultimately secure a court judgment for the debt. The small claims track is designed to be a straightforward and cost-effective route for debt recovery, ensuring that claims are handled with minimal complexity and legal expense.