Civil Litigation Solicitors

Do you own a business and want to bring a debt claim or are you a debtor of this type of claim? If so, are you aware of the Pre-Action Protocol for Debt Claims?

The Ministry of Justice has published the Pre-Action Protocol for Debt Claims (the “Protocol”), which comes into force on 1 October 2017. The Protocol applies to any business, including sole traders and public bodies claiming payment of a debt from an individual, including a sole trader. It does not apply to business-to-business debts unless the debtor is a sole trader.

The Aim of the Pre Action Protocol

The aims of the Protocol are to encourage early communication between the parties and to avoid court proceedings.

The pre-action protocol appears to be largely aimed at larger commercial unsecured lenders and creditors, thus the majority of the burden falls on the business creditor to comply with rather than the individual debtor.

Thus, it is advisable that the parties seek legal advice at an earlier stage to avoid any mishaps in discharging the burden. There are, however, alternative methods creditors may consider in recovering debts, such as serving a statutory demand.

I am the creditor

The Protocol requires the creditor to send by post a letter of claim to the debtor, setting out the amount of the debt (addressing whether interest or charges is inclusive), how the debt arose and details of how the debt can be paid or whether there are payment options. The letter must include the Information Sheet and Reply Form and a Financial Statement for the debtor to complete. The creditor must allow the debtor a reasonable period of time to do so.

I am the debtor

The debtor should use the Reply Form to respond.

Both Parties

The parties should exchange and disclose documents as early as possible, to help them understand each other's position. The debtor can request copies of any documents from the creditor and enclose documents it thinks are relevant. The creditor must provide documents or information within 30 days of any request. If the parties cannot come to an agreement about the repayment of the debt, they should consider using an appropriate form of Alternative Dispute Resolution.


Can the creditor bring court proceedings?

If the debtor does not reply to the letter of claim within 30 days of the date of the letter, the creditor may start court proceedings, provided that they have given 14 days' notice to the debtor of their intention to do so.

The creditor should not start court proceedings until 30 days from receipt of the completed Reply Form, or 30 days from the creditor providing any documents requested by the debtor – whichever is later.

The Court will expect the parties to have complied with the Protocol if the matter proceeds to litigation and will consider any non-compliance when giving directions for case management. This could mean that even if successful a creditor who has not complied with the Protocol could be penalised on costs.

If the debtor responds to the letter of claim but an agreement is not reached, the creditor can commence court proceedings but should give the debtor at least 14 days' notice of their intention to do so, unless urgent action is required.

Should you require further information and/or assistance with the above, please contact Simran Kaur, Trainee Solicitor on 0203 114 1205.

Author Simran Kaur is a Trainee Solicitor in Duncan Lewis Solicitor’s Civil Litigation Department. Simran joined the Civil Litigation and Dispute Resolution Department in early 2017 and assists with the following matters, including but not limited to; dispute resolution (litigation, arbitration or mediation), professional negligence claims, debt recovery; civil penalty notice; insolvency; contractual disputes, leasehold disputes, contentious probate matters, boundary and neighbourhood dispute matters. Simran is a pro- active and tenacious lawyer, and although routinely based in our Harrow branch, she is happy to assist clients throughout the UK. Furthermore, her dynamic approach allows her to deal with a diverse range and complex matters.

Duncan Lewis Civil Litigation Solicitors

Duncan Lewis is one of the leading solicitors in England and Wales offering expert litigation and alternative dispute resolution services offering expertise in ADR & Mediation, Bankruptcy, Bankruptcy, Banking & Finance, Company & Commercial, Contentious Probate, Defamation, Debt Recovery, Fraud, International, Property and Professional Negligence. The firm regularly handle claims at the County Court as well as high-value claims at the High court, the Commercial Court and the Court of Appeal. If you have a litigation issue which you wish to discuss in confidence, please do not hesitate to call us on 0333 772 0409.