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New Changes to the Debt Recovery Protocol

The Pre-Action Protocol for Debt Recovery will come into effect from 1 October 2017. The new Protocol will apply to any business (including Sole Traders and Public Bodies) claiming payment from an individual and describes the conduct the Court would normally expect of the parties prior to the commencement of legal proceedings.

What are these changes?

There is currently no specific Pre-Action Protocol for debt claims, although parties are expected to comply with the existing Practice Direction for Pre-Action Conduct.

As with the present Protocol on Pre-Action Conduct, the Creditor is required to send to the Debtor a Letter of Claim (also known as a Letter Before Action) setting out full details of the amount outstanding and how the debt has arisen. One of the key changes is the requirement for the Creditor to provide the Debtor with a Reply Form.

A Debtor should respond using the Reply Form indicating whether they admit or dispute the debt (or part of it), put forward any offer of repayment, indicate whether they are seeking advice and request any additional documents/information they need.

The Creditor is also now required to provide the Debtor with 30 days’ notice of their intention to commence court proceedings. So, if the Debtor remains silent, the Creditor can proceed to commence the claim.

Who will these changes apply to?

The Protocol will apply to businesses and public bodies claiming payment of a debt from an individual Debtor. It will not apply to business-to-business debts, unless the Debtor is a sole trader or where another Protocol applies (e.g. in respect of mortgage arrears).

If you would like to discuss how these changes may affect your business and credit control procedures please contact us now on 01707 332 498 for further advice.