What is a Letter before Action (LBA)?

What is a Letter before Action (LBA)?

A Letter before Action (LBA) is an official letter notifying the debtor that, if the debt is not paid or reasons for none payment are notified within a given time, court proceedings will start. A creditor, a solicitor, or a debt collection agency informing the debtor that legal action can be taken against them are eligible to send this letter. It is sent prior to initiating court action and is the last demand which officially reminds the debtor to fulfill the requests before taking matters further. Although the requirements for an LBA vary based on who is the recipient of the letter, it has to include:

  • Contact details of the creditor and the writer’s involvement.
  • A detail of the amount of debt owed, interest and costs being charged..
  • Details of how and when the payment should be made or reasons for non-payment
  • A deadline by which a reply should be made. This deadline will also be based upon the legal requirements, which are different for businesses and an individual. For businesses the deadline is 7 – 14 days and for consumers/individuals it is 30 days.
  • Notification to proceed with the court actions if there is no response from the debtor.

 

There is some other information that can be included in the LBA, which can make things easier; however, it will vary depending on the case.

 

The LBA will give a time limit for a response and is the final pre-court action to achieve an amicable settlement. Court Rules require an LBA to be sent before any procedures are started.  A LBA specifically details the creditor’s case and identifies to the court why further actions are required.  It also clarifies that any proceedings will comprise a claim for Court fees and costs, wherever applicable.

Where a solicitor is instructed by a creditor/plaintiff it is a legal requirement by the solicitor to issue a LBA prior to the commencement of any court actions.

If sent at the correct time and coordinated within an all-around Credit Control policy, an LBA will have a good success rate achieving an amicable settlement, particularly when the debtor has no defense and has sufficient funds to meet the debt.

 

However, sending an LBA does not work in all cases, and starting with court proceedings is not only expensive but also time-consuming and should always be the last resort.

 

We, at Creditreform, are a well experienced debt collection agency and use various methods to secure a successful recovery without the need for expensive legal actions or up front fees.

 

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