On Sunday 1st October 2017, the Ministry of Justice implemented a new Pre-action Protocol for debt claims. This applies to any business (including public bodies, sole traders, limited companies and partnerships) claiming payment of a debt from an individual or sole trader.
The protocol sets out detailed rules for businesses to comply with when making a debt claim against an individual. In particular, the Protocol requires businesses to send a letter of claim before issuing proceedings and gives details of what should be included in the letter. The letter of claim must give full details of the outstanding debt and of the written (or oral) agreement. The protocol also provides for a standard ‘tick-box’ reply form which should be sent with the letter of claim, and the individual must be given a minimum of 30 days from the date of the letter of claim to respond.
The purpose of the protocol is to protect individuals from claims by businesses who give insufficient information about the debt. By introducing the new requirements the aim is to encourage the sharing of information and to promote settlement wherever possible.
Please note that the new Protocol does not apply to debt claims between businesses, individuals or individuals claiming against a business.
If you would like more information or advice on business debt recovery please contact our Carly Davies on 01228 516666.