A letter before action (also called a Letter of Claim) is a formal letter, warning of court action if payment is not received. It sets out the terms of the agreement and the balance that is owed and provides a set time period of at least 30 days from the date of the letter in which to pay. Enclosed with the letter is a statement of account an information sheet, a reply form and financial statement form.
Within the 30 days of the date of the letter, you must either pay the balance outstanding or respond to the letter by completing the reply form and the financial statement form.

Once the letter before action has expired the solicitor’s firm will seek their clients (your lenders) instructions. If no response has been received it is likely your lender will commence proceedings to obtain a court Judgement requiring you to pay the debt plus interests and costs that are continuing to accrue.

Once in receipt of instructions from the client (your lender) to commence litigation action, the solicitor will send a Claim Form to the county court money claims centre issuing proceedings. This is the solicitor’s and your lender’s opportunity to advise the court of the balance due on the account and the attempts they have made to remedy the situation with you.

Upon the Court receiving the Claim Form and Particulars they will issue the Claim and serve you with a copy of the Claim Form and Particulars. You should also be served with a Response Pack, which provides information on how you can respond to the claim and some documents to complete and return to court and the deadline for doing so. This is usually 14 days from when the Claim is served on you.

You have various options available to you and you can do the following:

• Pay the total claim
• File an acknowledgement of service. This will allow you 28 days from the date of service to file a defence or contest the court’s jurisdiction
• Defend the whole claim
• Admit that all the money is owed
• Admit that only part of the claim is owed
• Dispute the court’s jurisdiction
• Not reply at all.

If the claim is defended the claim may be transferred to your local court. The court is likely to give directions and a timetable for progressing the case to a hearing or trial where your defence can be considered. These directions will likely require you and the lender to provide disclosure of documents relevant to the claim, file and serve witness statements outlining the evidence in writing and attend a trial or hearing.

Once the time period for you to respond to the claim has expired the solicitor will contact the lender to see if you have made any contact or if a payment has been received.

If you do not make contact with the court, the lender or their solicitors and you do not settle or defend the claim, then the lender will usually instruct the solicitor to request Judgement in Default from the court.

A Judgement is a court order stating that the sum is due. Unless you make payment of the sum required by the Judgement, or issue an appeal or application to set the Judgement aside (as appropriate), the lender may commence enforcement proceedings against you.

A Judgement will stay on your credit record for 6 years. If you repay the full amount within one month you can apply to get the Judgement removed from the register. If you repay the full amount after one month, you can apply to get the record of the Judgement marked as satisfied.

Once the solicitor receives instructions to request Judgement the solicitors will apply for Judgement in in Default.

If the lender accepts your payment proposals the solicitor will be instructed to obtain Judgement by instalments.

Once the county court money claims centre receives the request for Judgement the court will enter Judgement and serve a copy of the Judgement on you.

Once Judgement has been entered the solicitors will notify the client (your lender) and request further instructions as your lender may want to commence enforcement action.

If Judgement by instalments has been entered your lender will monitor payments to see if the instalments are being maintained. If payments are not being maintained your lender may instruct the solicitor to commence enforcement action.

Once Judgement has been obtained, and if it has not been paid or appealed, your lender may consider the following enforcement action:-

1. Order to attend Court for Questioning

The Court will order you to attend your local court at a specified date and time were you will be questioned on oath by an officer of the court.  If you fail to attend the hearing the matter will be referred to a Judge for a committal order to be made against you.
The Judge may make a suspended committal order providing you with a further chance to attend for questioning at a different date and time.  If you fail to attend the hearing again then a warrant will be issued for your arrest.

2. Warrant for control of goods

The bailiff will issue a warrant of control of goods and will give you 7 days to make the payment.  If you do not make the payment within the 7 days the bailiff will visit your home or business to see if anything can be seized and sold to pay the debt.  The bailiff will take control of and the sell your goods to raise funds to satisfy the debt. There are certain goods that cannot be taken by bailiffs, such as clothing.

3. Attachment of earnings order

The lender may instruct the solicitors to apply for an attachment of earnings order.  This order tells the employer the total debt owed by you, the amount of the weekly or monthly deductions to be made by the employer.

At each payday the employer is ordered to set aside the employee’s protected earnings

Calculate the employee’s attachable earnings

Deduct the amount specified in the order   

Pay the remainder to the employee

The employer then pays the money deducted periodically to the court who will then pay to the lender.

4. Third party debt order

The lender may instruct the solicitors to obtain a Third Party Debt Order.  The court can freeze money in your account for the benefit of the lender.

5. A charging order

The lender may instruct the solicitors to obtain a charging order.  This is an order placing a charge on your property such as a house or a piece of land.  The charge will be for the amount the vendor is owed.

The lender will not recover their money until you either sell the property or in some circumstances the lender may be able to apply to the court for an order to force the you to sell the property.