Debt Recovery and Pre-Action Protocol

The pre-action protocol for Debt Claims came into effect in October 2017.

Why must I comply?

Creditors must now follow this protocol correctly before they can take someone to Court for non-payment of debt/invoices.

The protocols aim is to encourage early engagement and communication between the Creditor and their Debtor, and to therefore resolve the matter without the need to start Court proceedings.
It hopes to encourage parties to act in a reasonable and proportionate manner and to support the efficient management of proceedings that cannot be avoided.

If a matter proceeds to litigation, the Court will expect both parties to have complied fully with this Protocol, and non-compliance will be taken into account when the final decision is made.

How do I comply?

To comply with the protocol,  a Letter before Claim must be sent, which lays out explicit information regarding the debt, such as how it arose, whether it was a written or oral agreement, what was actually agreed, and how to pay.

This letter must be sent by post, (unless specifically requested otherwise by the Debtor and another method of contact has been provided).  It should also include either an up to date (or most recent) statement, including details of any interest or charges incurred OR, state in the Letter of Claim whether interest or other charges have been accrued and if they are continuing.
As well as this, you must also include an Information Sheet, Reply Form and Financial Statement.

A minimum of 30 days should then be given to respond.

If the Reply Form  is returned asking for further documentation to be sent, this must be sent to the Debtor, or  they should be given a written explanation as to why the documentation is unavailable.  Or if they indicate they are seeking debt advice, then you must now allow a reasonable period for this advice to be obtained.

Should the Reply Form be returned partially completed, this must be taken by as an attempt to engage with the matter, and the Debtor should be contacted to discuss things further.

If it is indicated that more time is needed to pay and that an arrangement is being sought, they you should negotiate and try to reach an agreement for the debt to be paid, in line with the Debtors income and expenditure, which was returned on the Financial Statement.    However, should you  not agree to this debt being paid in instalments, you must provide the Debtor with a written reason why.

If you are still unable to come to an agreement over any aspect of this debt, the Protocol states that both yourself and the Debtor should take appropriate steps to resolve the dispute without the need for Court proceedings, and suggests that the use of an appropriate form of Alternative Dispute Resolution is considered.

This could take the form of discussion and negotiation, or some more formal process, such as the use of mediation, (although the potential cost of this should be considered in relation to the amount of debt alleged to be owed).

In any event, any queries raised should be responded to fully and no proceedings should be commenced until a minimum of 30 days have elapsed form receipt of the Reply Form

Pre-Action protocol for Debts is no straightforward thing, and can be very time consuming and lengthily – let us take on the stress and inconvenience for you by complying fully with this protocol and chasing the debt on your behalf, freeing you up to concentrate on more important business priorities knowing your debt is safe in our hands.   Contact us at james@revenueservicesltd.com or by phoning 01179 040370