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Pre-Action Protocol for Debt Claims

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This article was submitted by High Court Enforcement

Pre-action protocol is applicable to any business, including sole traders who have a debtor that is an individual. This protocol, which was introduced in 2017 outlines the tasks that need to be fulfilled by the creditor.

The aim of the protocol is for any issues and to encourage early engagement so that the parties can resolve the issue between themselves. The parties will be expected to act in a reasonable and proportionate manner, and this includes the agreeing to a reasonable payment plan if it is offered by the debtor.

So, if you are a business and a member to the public owes you money then you’ll need to

Letter of Claim

Send a clearly dated Letter of Claim through the post. This Letter of Claim needs to include:

  • A summary of the total amount owed
  • Details about interest and other charges such as administration fees
  • Details about the agreement in place including a copy of the agreement
  • A statement of the account
  • Details of how to pay the debt
  • Details about how payment options can be discussed
  • A reply form and the address to return it to, here is a template

The debtor has 30 days to respond to the Letter of Claim. After 30 days have passed then the business can proceed to court action.

Dispute resolution

If there is a dispute over the debt, this can include a dispute over the existence, enforceability or amount then Alternative Dispute Resolution might be considered as a path to resolution.

The court will only proceed if pre-action protocol has been adhered to. If the business hasn’t completed the pre-action protocol, then it is likely the court will consider this non-compliance when giving directions. This could be a hinderance to an otherwise straightforward case of a judgment being issued to the debtor.