As from 1 October 2017 the Pre-action Debt 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 scope of the Protocol is wide and will apply to management companies and landlords who are, for example, collecting service charge arrears.
The aims of the Protocol are to encourage early communication between the parties and avoid court proceedings, by agreeing a repayment plan or considering using a form of alternative dispute resolution (ADR). Parties are also encouraged to act reasonably and proportionately to the size of the debt, and to support each other in the efficient management of proceedings that cannot be avoided.
Failure to follow the various steps and time lines set by the Protocol may lead to delay in recovering the debt along with the real possibility of costs sanctions and reduced interest within any Court proceedings. It is important to ensure the correct process is applied to debt recovery.
Please do not hesitate to contact me if you require assistance in collection of debts.
The new Pre Action Protocol for Debt Claims has been set down by the Government and must be utilised in all debt claims from the 1st October 2017. The new rules set out a process which must be followed in order to recover outstanding debt. Failure to follow this Protocol will result in cost consequences and may affect your company’s ability to recover the debt.