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Pre-action Protocol for debt claims

The Pre-action Protocol for debt claims (“the Protocol”) comes into force on 1 October 2017 and may well have a severe impact on a business if it has outstanding debts due from individuals.

The Protocol will apply to any business (Limited/PLC, partnerships/LLP’s, sole traders and public bodies) when claiming payment of a debt from an individual (this includes a sole trader). The Protocol does not apply if the matter is covered by another pre-action protocol such as the protocol for mortgage arrears.

The Protocol does not apply to business-to-business debts (unless the debtor is a sole trader) and the Protocol sets out the conduct the court will normally expect of parties prior to Court proceedings being commenced.

The Protocol brings the end of a letter of claim being sent threatening payment within 7 days and then starting off proceedings.

The Letter of Claim

The first stage of the Protocol requires the Creditor to send a much more detailed Letter of Claim than previously required. The Letter of Claim with the documents required to be attached to the letter, increases the length to approximately 10 pages.

The Creditor must now attach a series of documents (all of which are annexed to the Protocol):

  • An Information Sheet
  • Reply Form
  • Financial Statement Form
  • A statement of account showing interest and administrative charges

The Letter of Claim must be clearly dated and sent by post (not email, although it may also be sent by email if it has been posted) the same day.

The Creditor must give the Debtor 30 days to reply before proceedings can be issued.

The Reply

One of the documents which the Creditor must attach to the Letter of Claim is a Reply Form and the Debtor is encouraged (not mandatory) to reply on this Form.

The Reply is split into four parts:

  1. Asks the Debtor to consider whether they accept the debt in full or in part, or whether they do not know of the debt or whether they dispute the debt.
  2. If the debt is admitted, the form asks the Debtor how payment will be made
  3. The third part of the form asks the Debtor if they intend to obtain debt advice
  4. The last part deals with what documents are being supplied or requested by the Debtor

The Debtor should send the completed Reply Form back to the Claimant within the prescribed 30 days.

The aims of the Protocol are to:

a) 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;

b) 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;

c) encourage the parties to act in a reasonable and proportionate manner in all dealings with one another (for example, avoiding running up costs which do not bear a reasonable relationship to the sums in issue) and;

d) support the efficient management of proceedings that cannot be avoided.

What does this mean for creditors?

The process for recovering debts will be more onerous for those owed money as:

  • The Protocol front-loads a significant proportion of costs onto creditors pre-issue
  • Creditors are required to provide more documentation to debtors in specific formats
  • There is increased scope for delaying payment by “difficult” debtors who can delay payment by up to 90 days
  • Creditors will need to be more pro-active when engaging with debtors to ensure information is properly exchanged and time periods met
  • Additional costs and delays will be incurred particularly if ADR is utilised
  • A review of existing recovery processes and changes will probably be necessary

For businesses dealing predominantly with consumers or sole traders and providing credit, the Protocol requires a lot more effort and patience when collecting outstanding debts.


For advice and further information contact Robin Koolhoven on or telephone 01926 491181



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