New Pre-Action Protocol for Debt Claims
The Pre-Action Protocol for debt claims came into force on the 1st October 2017. Currently, although parties are expected to comply with the existing Practice Direction for Pre-Action Conduct there is no specific Pre-Action Protocol for debt claims.
The Protocol will apply to any business (sole traders and public bodies included) claiming payment of debt from an individual, however does not apply to business to business debts.
Its aims are to:
- Encourage early engagement and communication between the parties, including early exchange of sufficient information about the matter to help clarify whether there are any issues in dispute
- Enable the parties to resolve the matter without the need to start court proceedings, including agreeing a reasonable repayment plan or considering using an Alternative Dispute Resolution (ADR) procedure
- Encourage the parties to act in a reasonable and proportionate manner in all dealings with one another (for example, avoid running up costs which do not bear a reasonable relationship to the sums in issue)
- Support the efficient management of proceedings that cannot be avoided
Should creditors fail to comply with the Protocol, possible results include: a further delay in collection of the debt should the creditor fail to comply; being barred from recovering interest from a debtor; or additional costs sanctions.
If you are a business seeking advice in respect of your credit control processes, or assistance with debt collection, please get in touch and see how we can help.