Letter before Claim for Unpaid Debt (Debt Protocol)

This document is letter which may be sent before a claim is made for unpaid debt in England and Wales. The letter is designed for use where the debt is owed by an individual to a business and where the Pre-Action Protocol for Debt Claims (the 'Debt Protocol') applies. The business which will send this letter is known as the creditor and the person who will receive it is known as the debtor.

The Debt Protocol generally applies where a business (including a sole trader) is claiming debt from an individual person. When the Debt Protocol applies it is important to follow the principles set out within it. This includes sending a letter before claim which is compliant with the Debt Protocol. The Court may impose sanctions where a party fails to comply with the Debt Protocol during the pre-action process.

It is possible to use this document where the debt has been assigned by the original creditor to a third party. An assignment of debt involves the situation where the original creditor transfers the debt to another third party (the assignee) and the assignee then holds the right to receive the repayment of the debt. If the debt is assigned, the assignee can generally bring a claim on the debt. An assignment must:

• transfer the benefit of an agreement (a contract);
• transfer the whole rights for the whole of the debt;
• the assignment must be in writing and signed;
• all relevant parties must receive notice of the assignment.

For commercial debts (where both the creditor and debtor are businesses), a demand and/or final demand may be used before using a different letter before claim under the usual Practice Direction Pre-Action Conduct and Protocols. This is because there are different rates of interest and implied terms of payment for commercial debts. A different process must also be used where the creditor wishes to issue a statutory demand.

Under the Debt Protocol, there are specific documents which must be attached to the letter by the creditor. Space is provided at the conclusion of the letter to attach those documents and they are explained further below.

How to use this document

This document should be completed accurately, with all the relevant information in respect of the debt. It is important that the letter is posted on the day it is dated or, if that is not reasonably possible, the next day.

A copy of the following documents must be enclosed with the letter:

• the Information Sheet which may be found at Annex 1 of the Debt Protocol.
• the Reply Form for the debtor to complete which is also found at Annex 1 of the Debt Protocol.
• a Financial Statement form, an example of which is at Annex 2 of the Debt Protocol and on the Money Advice Service website.

In addition, the creditor may wish to include copies of the relevant invoices from which the debt arises and an up-to-date statement of account. It should be noted that where a statement of account is not enclosed, the details of the debt together with any interest and charges should be set out in full within the letter. The creditor may also wish to include a full copy of the Debt Protocol with the letter, to assist the Debtor in understanding their obligations under it.

The letter should be signed and sent to the debtor by post. The letter should only be sent via email if the debtor has made an express request that correspondence should not be sent via post and should be sent in this manner instead. The creditor may wish to send the letter in a tracked format so that it can prove the date of sending.

If the debtor does not respond or make a payment within 30 days of the date of the letter, the creditor may then take steps to issue court proceedings.

Applicable law

Debts of this nature are generally governed by the law of contract.

The Civil Procedure Rules, the Pre-action Protocol for Debt Claims (Debt Protocol) and the overarching Practice direction on Pre-Action Conduct and Protocols (Pre-Action PD) apply to claims of this nature.

The Law of Property Act 1925 governs the assignment of debts.

Help from a lawyer

You can choose to consult a lawyer if you need help.

The lawyer can answer your questions or help you through the process. You will be offered this option when you complete the document.

How to modify the template

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.