Pre-Action Protocol for Debt Claims – October 2017

Pre-Action Protocol for Debt Claims – October 2017

There is a new protocol that creditors must now follow when pursuing payment of a debt from an individual (including sole traders). This new protocol applies to a creditor that is a business (including sole traders and public bodies) and comes into force on 1 October 2017.
For those creditors who may not already know, the protocol referred to is a protocol under Civil Procedure Rules, in short, they are the courts expectations of the conduct of parties before proceedings are issued in a court.

 

The current protocol already encourages parties to enter to communication and make attempts to settle issues without intervening the court. The new protocol essentially extends the courts expectations in that the creditor must now serve more information upon the debtor to increase the chances of matters being settled without court proceedings being necessary.

 

What exactly has changed with the information that must be provided by the creditor to the debtor?

 

The creditor should send a Letter of Claim to the debtor before proceedings are started. The Letter of Claim should –

 

(a) contain the following information –
(i) the amount of the debt;
(ii) whether interest or other charges are continuing;
(iii) where the debt arises from an oral agreement, who made the agreement, what was agreed (including, as far as possible, what words were used) and when and where it was agreed;
(iv) where the debt arises from a written agreement, the date of the agreement, the parties to it and the fact that a copy of the written agreement can be requested from the creditor;
(v) where the debt has been assigned, the details of the original debt and creditor, when it was assigned and to whom;
(vi) if regular instalments are currently being offered by or on behalf of the debtor, or are being paid, an explanation of why the offer is not acceptable and why a court claim is still being considered;
(vii) details of how the debt can be paid (for example, the method of and address for payment) and details of how to proceed if the debtor wishes to discuss payment options;
(viii) the address to which the completed Reply Form should be sent;
(b) do one of the following –
(i) enclose an up-to-date statement of account for the debt, which should include details of any interest and administrative or other charges added;
(ii) enclose the most recent statement of account for the debt and state in the Letter of Claim the amount of interest incurred and any administrative or other charges imposed since that statement of account was issued, sufficient to bring it up to date; or
(iii) where no statements have been provided for the debt, state in the Letter of Claim the amount of interest incurred and any administrative or other charges imposed since the debt was incurred;
(c) enclose a copy of the Information Sheet and the Reply Form at Annex 1 to this Protocol; and

 

Does this new protocol apply to rent arrears too?

 

This is a question which many companies have raised since various publications about the new protocol. The answer in short is yes, if you are claiming for rent arrears only the new protocol shall apply.

 

If you are claiming for possession of a let premises and rent arrears at the same time the prescribed form of notices such the section 8 notice under the Housing Act 1988 will still apply and allow the landlord to claim for possession of the let premises and claim for rent arrears without this new protocol being followed.

It is perhaps now more likely now that the section 8 notice will be amended by regulation to include information alike that contained in annex 1 and 2 of the new protocol.

 

Landlord Advice UK have updated their documents for debt recovery for businesses to comply with the new protocol. If you are a business owed a debt and want to act, contact our experts, we will not only serve the relevant letter of claim on the debtor, we will also provide you with an up to date template which your business can use for future debts to reduce your legal costs.

 

If you already have a judgement for a debt, we can trace the debtor, transfer the judgement to the high court and have enforcement agents attempt to recover the debt at no cost to you. How does this work? – Read here