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New Pre-Action Protocol for Debt Claims

On 1 October 2017, the Pre-Action Protocol for Debt Claims (‘the Protocol’) comes into force. The Protocol has the potential to have a large impact on businesses when it comes to recovering debts and will substantially increase the administrative steps and costs a business will have to go through when recovering debts from individuals.

What it is?

The Protocol (found here) sets out the conduct required by parties prior to the commencement of debt recovery proceedings.

The Protocol must be followed where a business is claiming the repayment of a debt from an individual, including a sole trader. It does not have to be used where another pre-action protocol is applicable.

As with other pre-action protocols, the courts will expect compliance with the Protocol prior to the issue of proceedings and will take into account non-compliance when giving directions and making costs orders. Leeway is likely to be given where limitation periods are approaching or there has been compliance in form, if not in substance.

What is its purpose?

The aim of the Protocol is to promote early engagement between the parties, including exchange of information. It is also aimed at encouraging parties to settle debt claims without recourse to the courts, and through the use of Alternative Dispute Resolution (ADR) where possible.

The Protocol also encourages the early disclosure of documents, enabling the parties to understand each other’s position.

What is required?

A business looking to recover a debt owed to it must send a letter before claim to the debtor before commencing proceedings. The letter of claim must include a wealth of information including:

  • The amount of the debt, including interest, and whether interest or charges are continuing to accrue;
  • The agreement from which the debt arises, including information about the agreement, whether it is an oral or written agreement;
  • Where instalments are being paid, why this method of payment is no longer appropriate; and
  • Details of how the debt can be repaid.

The letter of claim must also include an up-to-date statement of the amount of the debt and an Information Sheet, Reply Form and Financial Statement Form, each of which can be found annexed to the Protocol.

The letter of claim must give the debtor a period of 30 days within which to respond and must be sent by post, unless the debtor has previously provided alternative details.

The next steps

The debtor should use the Reply Form to respond within the 30 day period. If the debtor wishes to seek legal advice, they must be allowed a reasonable time to do so. Where the debtor proposes to pay in instalments, this must be considered by the business when taking into account the information provided.

If the debtor doesn’t respond within 30 days, the business may issue a claim (provided it has no other obligations to the debtor), although it should allow a few extra days after the expiry of the deadline to ensure that a response hasn’t been posted.

Alternative Dispute Resolution

If there remain areas of dispute between the parties once the letter of claim has been sent and reply received, the parties are required to consider whether ADR may be appropriate so that the dispute can be resolved with the need for proceedings to be issued. In the case of larger debts, this may include mediation.

Additionally, where a resolution has not been achieved, whether through correspondence of ADR, the Protocol requires the parties to “take stock” and undergo a review of their positions to see whether a settlement can be reached. The business will also need to give 14 days’ notice of an intention to commence proceedings.

This article is for information purposes only and is not legal advice. It should not be acted or relied upon and legal advice should be sought before applying any of the information in this article to any facts or circumstances.

For more information, or to discuss any issues arising from this article, please do not hesitate to contact us on +44 (0)20 8909 0400 or by email at

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