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New Pre-action Protocol for Debt Claims

by Elin Owen

A new Pre-action Protocol came into force on 1 October 2017 and it applies to any business (including sole traders and public bodies) claiming a payment of a debt from an individual (including a sole trader). The Protocol does not apply to business to business debt therefore it will not apply to debts owned by companies or partnerships however, it will apply where both businesses are sole traders.

The aims of the new Protocol are to:

1. Encourage early engagement and communication between the parties (including exchanging information to clarify the issues in dispute)

2. Enable parties to resolve their disputes without having to engage in court proceedings (including setting out alternative methods of resolving the dispute)

3. Encourage parties to act in a reasonable and proportionate manner, and

4. Support efficient case management

Procedure of issuing a debt claim under the new Pre-action Protocol:

1. Creditors must send a Letter of Claim to the debtors before starting any court proceedings

2. Forms to include with the Letter of Claim

  • Information Sheet and Reply Form. The Reply Form is to be used by the debtors to reply to the claim, and
  • Financial Statement reflecting the outstanding balance and details of interest and administrative charges

3. Request for documents

  • If the debtor has requested a document, the creditor must provide a copy to the debtor within 30 days, or explain why the document is unavailable

4. The Letter of Claim must be sent by post unless a request has been made by the debtor for it to be sent by email

5. Response

  • Debtor has 30 days from the date of the Letter of Claim to respond. If debtor fails to respond, then the creditor can issue proceedings; or
  • If debtor is seeking advice, the creditor must allow a reasonable period for the debtor to obtain such advice and should not start court proceedings earlier than 30 days from the completed Reply Form (or from the creditor providing the debtor with the documents requested, whatever the later); or
  • If no agreement is reached between parties, the creditor may give the debtor at least 14 days’ notice of their intention to start proceedings

Implications of the new Protocol

If parties do not comply with the Protocol this may result in cost consequences if proceedings are later issued; Parties must try to resolve cases without the need for proceedings; Proceedings cannot be issued earlier than 30 days after the date of service of the Letter of Claim.


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