From 1 October, the Pre-Action Protocol for Debt Claims comes into force. This affects how creditors pursue debt claims against individual debtors, including sole traders.
Amendments and additions have been made to the documents in our Debt Recovery and Legal Action Group to assist customers in complying with the Protocol.
What is the Pre-Action Protocol for Debt Claims?
The Protocol sets out the steps the creditor and debtor should take before commencing proceedings for debt recovery. The idea is that, before the matter arrives at court, the parties will have exchanged sufficient information to understand each other’s position and make decisions about how to proceed.
The creditor and debtor are also expected to try to settle the issues without proceedings, including considering a form of Alternative Dispute Resolution (ADR).
When does the Protocol Apply?
The Protocol applies where a creditor wishes to bring court proceedings against an individual debtor. This includes sole traders. Other types of business debtor (e.g. partnerships, companies) are not affected by the protocol.
What does the Protocol Require?
The Protocol requires a creditor, before starting court proceedings, to provide certain information to the debtor. This information is presented in a Letter of Claim. The debtor must reply within 30 days using a pro-forma Reply Form.
The parties are then required to provide copies of relevant documentation and attempt to settle the matter without involving the court. If the matter does proceed to court, the creditor must give the debtor 14 days’ notice of their intention to start proceedings.
Our Debt Recovery and Legal Action Group
Our Debt Recovery and Legal Action Group has guidance notes, template letters (including Letters of Claim) and forms for every step of the debt recovery process, including new templates to help customers comply with the Protocol.
The contents of this Newsletter are for reference purposes only and do not constitute
legal advice. Independent legal advice should be sought in relation to any specific