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Is the new Protocol for Debt Claims unfair on creditors

The new Pre-Action Protocol for Debt Claims came into force in October last year requiring anyone who is owed money by an individual (not a business) to follow the prescribed process before commencing court action against that individual. 

WHY IS THERE A PRE-ACTION PROTOCOL?  The aims of the Pre-Action Protocol are to encourage the parties to communicate with a view to resolving the matter and therefore avoiding the need for court proceedings.  The objective is, therefore, to prevent both sides from wasting unnecessary time and costs in court.  On the face of it this may seem beneficial to both parties if they can come to a resolution without involving the Court.

WHAT IS THE PROCESS?  The creditor must send a Letter of Claim to the debtor.  In this letter the creditor must set out the amount of the debt plus any interests or charges, details of the agreement made between the parties (that the debt arose from) and details of how the debt can be paid. 

The creditor must give the debtor 30 days from the date of the Letter of Claim to complete and return the Reply form, sent with the letter, and must notify them of such in the Letter of Claim.  If no response is received after this time then the creditor can commence court proceedings. 

IS THIS A FAIR PROCESS?  This approach may encourage parties to engage with each other and try to reach a settlement.  Indeed, the Protocol guidance and annexed forms are structured in such a way as to assist litigants in person with pre-action conduct.  However, the process does appear to be more weighted in favour of the debtor who is given a generous amount of time to either, pay the debt, dispute it or put forward their payment proposals.  There is also the potential for debtors to abuse the process by deliberately delaying their responses.  Furthermore, there is a burden on the creditor to ensure that they comply with the prescribed process to avoid being penalised by the Court.  Plus, if they have to wait at least a month, if not longer, before taking court action to recover the debt, this could put added pressure on their business.

WHAT WE CAN DO TO ASSIST.  At Dawson Hart, we are experts on debt recovery generally and would be happy to help out where possible.  Under our Fixed Fee Debt Recovery Scheme, we can write a protocol compliant Letter of Claim to the debtor on the creditor’s behalf for just £15 (+VAT).  This will remove the pressure from the creditor of ensuring that they are complying with all the formalities.  Contact me for further information.