Why Debt Recovery Letter of Claim Are So Effective?

Most, if not all, businesses will need to collect outstanding debts at some point, regardless of the industry they operate in. For most businesses, outstanding debt collections must be handled efficiently to support cash flow.

How to collect debts from a limited company and explained that the first step is usually to send a letter before action in UK to the debtor following the pre-suit procedures and protocols contained in the Code. It can lead to civil proceedings (CPRs) if the other company ignores emails and phone calls to settle outstanding debts. For more information on what to include in a collection letter and the debt collection process once a collection letter has been sent.

Why Do We Need To Send a Letter Of Claim?

It is important to issue a letter of claim before legal proceedings begin for the following reasons:

Saves Time & Money

Issuing a formal letter of claim before debt recovery before legal proceedings begin saves time and money. For most business owners, responding to a lawsuit is a costly and time-consuming process that takes them away from what matters most: running their business. Hiring a debt collection lawyer to represent you allows you to continue running your business with the knowledge that someone else is helping you collect outstanding debts. 

If the debt owed to your business is less than £10,000, the matter will be dealt with through the small claims process in the courts. It means that in most cases, even if you win in court, you will not be able to recover legal fees, apart from very limited fixed costs and legal costs paid. Furthermore, even in the most expedited trials, it may take several months for the court to issue a judgment, especially if the trial is contested. From a commercial perspective, there may be significant time and cost benefits to be gained if you can resolve your debt collection issues sooner rather than later without court intervention.

Finally, a letter of claim service in UK marks the start of a more formal process to resolve outstanding debt issues, especially if the debtor has not taken your payment request seriously. A formal letter of claim that gives the debtor a deadline to respond is more likely to keep the debtor focused on resolving the issue.

On the other hand, if a debtor has a genuine reason for not paying an outstanding debt, he or she is likely to explain that reason in their response to the letter of claim, which may allow for a discussion aimed at resolving the issues that have arisen and paying the debt.

In our experience, sending a letter of claim for debt recovery in UK encourages debtors to take action and pay their debts. Letter of claim from law firms threatening to take formal legal action to collect outstanding debts are rarely ignored.

Compliance with Court Demands

Another advantage of sending a demand letter is that it ensures that you are complying with the court rules contained in the CPR.

The Pre-Litigation Actions and Protocol Policy require that companies seeking to collect outstanding debts send a claim letter before legal proceedings begin.

It is very important to ensure that the parties can resolve their disputes without going to court. If a letter of claim is not sent before legal proceedings, the court may suspend (i.e. put on hold) the proceedings to allow the parties to comply with procedural directions, or waive the claimant's costs, or both, so that their claim is ultimately resolved and successful.