Do the new Pre-action Protocols apply to me?

There is a new pre-action protocol for debt claims as of 1st October 2017.

This means that the process for making a claim against overdue debt has changed, and it may affect you! The process can be complicated, but it is important that you understand what to do if you have ever owed or been owed debt. We have broken it down for you;

Does this apply to me?
The new pre-action protocol applies to all businesses claiming debt repayment, including public bodies and sole traders.

The debtor MUST be an individual or sole trader and does not apply for B2B (business to business) debt.

What do I do?

As a creditor (money is owed to you);

  1. Send a ‘Letter of Claim’ to the debtor.


    Make sure the date is clearly stated at the top of the letter. The new protocol means that debtors now have 30 days from the date of the letter to respond before court proceedings can begin.

The letter must include details of the debt, e.g.
-Who it is owed to and who it is owed by.
-When and how the debt arose.
-By which method of payment the debt should be paid off.

New protocol also requires to detail whether the debt arose by written or verbal communication.

Therefore you must also include;
Any written agreement that the payment is owed and overdue, including the date of the agreement and who was involved.

OR

If the agreement was verbal:

-Who made the agreement?

-What was agreed/when/where?

-Also a transcript of what was verbally said as far as is possible should be included.

-You must also include an up to date statement of accounts for the debt.

If the statement of accounts is recent but not up to date, you should include details of any interest charges or admin fees etc incurred in the time between the statement of accounts and the present to bridge the gap.

If there is no statement of accounts available, you should detail the charges incurred in the Letter of Claim.

You now have to wait for the debtor to respond.
They have 30 days from the date stated on the “Letter of Claim” before you are legally able to start court proceedings. The protocol also implies to be lenient. For example, to allow a couple of business days after the 30-day period ends – in case the debtor has sent their response towards the end of this time.

  1. Communicate with the Debtor

The debtor is required to send a reply form. In this form, they should detail whether they dispute the claim, if they are seeking advice, if they are unable to pay etc. They may make a request for the creditor to send over documents containing evidence of the debt owed. They may also send over documents of evidence to dispute the claim e.g. receipt of payment made that the creditor did not list in the Letter of Claim.
If a debtor is seeking advice, you must “allow a reasonable period for the advice to be obtained”. If this is going to pass the 30-day period, the debtor must detail why this is in their reply form.

This is simply an information exchange to clear any discrepancies.

The new protocol includes a mini-disclosure regime whereby these documents are required to be exchanged “…to enable [the parties] to understand each other’s position.”
If there are any documents that are unavailable, said party must detail why it is unavailable – this does not include stating that the document is not deemed relevant.

  1. Dispute Resolution

The aim of the new protocol is to resolve disputes over debt before court action has to be taken. At this time, it may be beneficial for you to seek help from a Civil or Commercial Mediator. Mediators are trained specialists whose job is to mediate between claimant and debtor and resolve a case before court.

Franklin James Credit Management provides a mediation service, with our debt collection service or as a standalone. So as a claimant we would take on your case and mediate with the client from start to finish, until your debt was reclaimed. Court can be expensive and there is no guarantee you will win your case, so settling the dispute beforehand is often the best option.

A common resolution is to offer a payment plan, whereby it is agreed in writing how much the debtor must pay over a certain amount of time, until the debt is paid off fully. This may include interest and late payment fees and is often paid off monthly or weekly. The creditor must consider the debtor’s situation (e.g. income and expenditure) in order to agree a reasonable payment plan.

  1. Take Stock”

The protocol suggests for each party to assess their position, to see if an agreement can be made whereby court action would be avoided.
If you are happy that the protocol has been followed, you may proceed to court action under the following circumstances;
– If there is no reply form, you may proceed with court action 30 days after the letter of claim.

– If the debtor has responded to you Letter of Claim but you are not in agreement, you must give 14 days’ notice before proceeding with court action.

As a debtor (you owe money);

  1. Reply Form

After receiving the ‘Letter of Claim’, you will need to assess the claim and prepare a reply form.
Deduce from the claim whether the debt owed and details are accurate and whether you want to dispute. You are able to request documents detailing the overdue payment and send back any that you think may improve your case e.g. receipt of payment made that the creditor did not list in the Letter of Claim.

  1. Seek Advice

If you feel like you might need advice, let the claimant know so that they can allow you time.
You have 30 days from receiving the letter until they are able to take action against you, so make sure you tell them if finding advice is going to take longer than this, and explain why.

  1. Dispute Resolution

If you can agree over the amount of money to be paid, but are unable to pay it, suggest a payment plan whereby the debt is paid off gradually. It may be helpful to seek help from a civil mediator at this point, if agreement cannot be made, to avoid the case going to court.
Equally, if you feel that you have evidence to suggest that you do not owe this money, you should start to build your case for filing a defence.
Court can be expensive and there is no guarantee you will win your case, so settling the dispute beforehand is often the best option.

For more information and a PDF of the full New Pre-Action Protocol for Debt Claims, click here

The protocol is not too dissimilar from what many debt collection agencies are currently doing, as it simply states what is already deemed as ‘good practice’.

However, there is a much higher focus on resolving the case before court action is needed. This is beneficial to relieve the strain on the small claims court where it is not always necessary, but a lot more work for a creditor and may require careful examination of the protocol to avoid scrutiny on incomplete compliance.

Franklin James strives to give you the best customer service you have ever had. So if you are struggling to chase a debt or think you need a Civil or Commercial Mediator please do not hesitate to contact us on 01494 422742 or email info@fj-creditmanagement.co.uk