A law firm which offers more

Call us: 0113 246 0622

The new Debt Pre-Action Protocol - is your house in order?


From 1 October 2017, where a business (including a sole trader or public body) claims payment of a debt from an individual (including a sole trader), the new Debt Pre-Action Protocol (the “Protocol”) will apply and parties will need to comply with its provisions before commencing legal proceedings. The clear aim of the Protocol is to reduce the number of claims being taken to court and requires businesses to ensure that their internal processes accommodate the requirements of the Protocol to avoid court sanctions.

One of the major changes which the Debt Pre-Action Protocol is set to implement is in relation to the Letter of Claim, which now has a prescribed list of information which must be included when being sent to the debtor. The Letter of Claim must now include:

An up-to-date statement of account must be included with the Letter of Claim, which should include details of any interest or other charges. If one is not available or up-to-date, the Letter of Claim must include this information.

In addition to the above, the Letter of Claim must be dated and posted (unless another form of delivery has been agreed with the debtor) on the same or following day and must include a Reply Form and a Financial Statement Form.

The creditor should not start court proceedings less than 30 days from receipt of the completed Reply Form, a period which can be extended if the debtor indicates they are seeking debt advice, requests further documentation or requires more time to pay. The debtor has 30 days to complete this and a partially completed Reply Form should be regarded as an attempt to engage, meaning the creditor should discuss the matter with the debtor prior to commencing any proceedings.

If the parties cannot agree about any aspect of the debt being claimed, they should take appropriate steps to resolve the dispute through alternative dispute resolution without starting court proceedings. This can involve anything from an informal conversation, to formal methods of dispute resolution such as mediation.

It is clear from the guidance surrounding the Debt Pre-Action Protocol that the onus is on creditors to provide individual debtors with as much information as quickly as possible. It is therefore incumbent on businesses to now begin implementing internal procedures which will allow them to comply with the Protocol and provide the necessary information as easily as possible to avoid any extra costs which could be incurred through the necessity of this front-loaded protocol. Ensuring the required information is easily accessible through new procedures will guarantee that the enforcement of outstanding debts and compliance with this Protocol is as easy as possible.

If you would like to have a discussion with one of our team, either in connection with the Debt Pre-Action Protocol and the new procedure and/or with the implementation of internal processes which will ensure compliance and practicality for your business, please contact our debt recovery team.

This blog was written by Stephanie Shepherd.



Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.