Picture of woman in discussions about a debt claim

A New Procedure for Debt Recovery

On 1st October 2017 ‘The Pre-Action Protocol for Debt Claims’ came in to force. It sets out a process for businesses, including sole-traders, to follow when making claims against individuals and sole-traders, to recover debts.

Although the new process increases the amount of work a creditor needs to do, the procedures are intended to help resolve debt recovery problems early on, resulting in less cases needing to go to court.

Prior to the introduction of this new protocol, debt claims did not strictly have to follow any specific procedure although Courts expected parties to follow the ‘general’ pre-action protocol, also encouraging early resolution.

The new procedure requires that businesses send a Letter of Claim, giving at least 30 days for a reply, before commencing any legal action. The Letter of Claim should include specific information including but not limited to:

  • The amount of the debt, including any interest and charges
  • Full details of any Agreements between both parties
  • Details of how the debt can be paid and how to proceed if the debtor would like to discuss payment options
  • An information sheet and reply form, along with a return address

When a Letter of Claim is received by a debtor, they will be able to use the enclosed reply form to admit the debt, dispute it or request further information. If a debtor notifies the creditor that they are seeking advice, then the creditor must allow reasonable time for that advice to be obtained before taking further legal action.

If there is no amicable resolution following the Letter of Claim being sent, then the creditor is required to provide the debtor with 14 days’ notice of their intention to issue court proceedings.

Courts will now expect businesses to comply with this protocol before issuing a claim with the Court.

Wosskow Brown’s Commercial Litigation Solicitor, Liz Henwood, who is based in our Head Office in Attercliffe said:

“I am hopeful that this process will encourage early resolution of matters saving time and money for our business clients.”

Should your business need more information about how this new process works in practice, and what Wosskow Brown can do to guide you through it, please don’t hesitate to contact our litigation team

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