New Pre-action Protocol for debt claims – are you ready?

employment and hr services

There is not long now until the new Pre Action Protocol for Debt Clams comes into force on 1 October 2017.

This will apply to any businesses that are claiming debts from individuals (consumers) and sole traders. Business to Business debts will remain unaffected by these changes.

The Protocol emphasises the obligation for parties to make every attempt to resolve debt claims without the need for Court Proceedings. This is echoed in the Protocol’s aims, the timescales for responses and the provision of information and documents.

The new Protocol is aiming to:

  • Encourage early engagement and communication between the parties and exchange any information required to clarify disputes.
  • Settle debt claims without the need to bring the claim before the court, including agreeing a reasonable repayment plan or considering using an Alternative Dispute Resolution (ADR) procedure.
  • 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)
  • Support the efficient management of proceedings that cannot be avoided.

For businesses dealing largely with consumers or sole traders the new Protocol will require not only a great change in credit control procedures but also a substantial patience when recovering debts. The creditors will have to ease on the pressure to the debtors by the prospect of looming Court Proceedings. Small businesses in particular, with worry about potential cash flow struggles will have to be extra vigilant on deciding when and to whom they provide credit facilities and act promptly when any debt arise.

The key changes to be aware of:

  • The first stage of the Protocol will require the creditor to send a much more thorough Letter of Claim than the current Letter Before Action.  The Creditor will need to include a list of information and documents when sending the Letter of Claim. A statement of account (including charges and interest claimed); a Reply Form (It is expected that Debtors will use the Reply Form to respond to the Letter of Claim) and a Financial Statement Form, as annexed to the Protocol.
  • The Creditor will have to wait for 30 days before court proceedings can be commenced. Under the Protocol, a creditor should not issue proceedings until 30 days after the date the Letter of Claim was issued. This is to allow a Debtor time to complete and return the Reply Form, and to encourage negotiations.  The same applies if the creditor is in receipt of the Reply Form from the Debtor and if the Creditor must provide documents requested by the Debtor.
  • If a response is received from the Debtor (this includes a partially completed Reply Form) the Creditor will be required to allow the Debtor a reasonable period to take any legal advice. If, following discussions, no agreement is reached, the creditor may give the debtor at least 14 days’ notice of their intention to start proceedings, unless there are exceptional circumstances (for example, the expiry of a Limitation period).

The new debt recovery process will undoubtedly be more burdensome for Creditors. Businesses are now faced with implementing the Protocol and for many a substantial change in process and approach is necessary.

If you require any further information about  the changes or require any assistance with collection of your debts, please contact Debt Recovery team at ML Solicitors on 0113 218 5731 or


For more information visit the official advice here.

This publication is intended for general guidance and represents our understanding of the relevant law and practice. Detailed advice should be sought for specific cases.

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Liga Germova debt recovery

Liga Germova

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