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New Pre-Action Protocol for debt claims

New Pre-Action Protocol for debt claims

By Hayley Grantham and Henrietta Toth

The new Pre-Action Protocol for debt claims comes into force on 1 October 2017, is your business ready?!

The Protocol applies to any business, sole trader or public body (Creditor) claiming payment of a debt from an individual, including a sole trader (Debtor).  It does not however apply to business-to-business debts unless the debtor is a sole trader.    

The Protocol sets out the steps and conduct that the Court would normally expect to see from the parties prior to commencing proceedings for a debt claim.  Parties who fail to comply with the Protocol run the risk of the Court making punitive costs orders against them in any proceedings that may be pursued in connection with the debt.

Under the new Protocol, the Creditor must serve a Letter of Claim on the Debtor which sets out comprehensive information about the amount of the debt, an up to date statement of account for the debt which includes interest and/or other charges which have been added, and, from the 1 October 2017, you will need to enclose the following:

  • The prescribed Debt Protocol information sheet;
  • The prescribed Reply Form for the Debtor to complete; and
  • The prescribed financial statement form for the Debtor to complete.

The above prescribed forms can be found via the Court website. 

From the 1 October 2017, the Debtors will need to be given 30 days as opposed to the usual 14 days to respond to a Letter of Claim during which time the Creditor cannot issue proceedings. Moreover, if a Debtor asks for further information or informs the Creditor they are seeking legal advice, the Creditor must wait an additional 30 days from the date of sending the further information or from the date of receipt of the Reply Form.       

Even where no agreement is reached between the parties, the Creditor must write to the Debtor again giving them an extra 14 days to reply and setting out their intention to commence legal proceedings. This could lead to Creditors having to wait at least 60 days (compared with the current 14 days) to commence proceedings for the recovery of a sum of money through the Courts. 

Though one may argue that the changes are minimal and that it is reasonable and fair to allow the Debtor additional time, the consequence of the changes could significantly impact the cashflow and cause further unnecessary delays for small to medium sized businesses. 

For advice on Debt Recovery, please contact a member of our Dispute Resolution team on 01992 300333.


Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances. 

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