Pre-Action Protocol for Debt Claims – has there been a material difference to creditors?

The pre-action protocol for debt claims came into force on 1 October 2017.  The pre-action protocol was put in place to try and encourage parties to settle matters early and avoid the need for court proceedings. Whilst there was pre 2017 a pre-action conduct for claims for debt, it was more relaxed and allowed creditors to issue proceedings 14 days after service of a letter before action.   Now two years on, we consider whether the protocol now in place has made a material difference to business creditors.

Since 1st October 2017, business creditors must send a Letter of Claim which includes:-

  1. The details of the debt;
  2. Details of how the debt can be paid;
  3. An explanation of why interim payments are not acceptable (if this is being offered / paid by the debtor);
  4. Details of the agreement under which the debt is payable;
  5. Information regarding assignment of the debt (if applicable);
  6. A Reply Form and information sheet;
  7. A financial statement; and
  8. An address to which the Reply Form should be sent.

This ensures that debtors are provided with specific, key information at the outset whereas previously, the information required to be sent to debtors often varied substantially and may have taken significant correspondence in order for the debtor to obtain all necessary information.  The requirement for a Letter of Claim, including specific information has streamlined the process somewhat.

That being so, pre-1 October 2017, a debtor only had a “reasonable time” in which to respond to the pre-action correspondence; namely 14 days for straight forward cases. However, post-1 October 2017, debtors have 30 days from the date of the Letter of Claim in which to respond by returning the Reply Form. If the business creditor or their solicitors receives a Reply Form, they cannot issue proceedings until 30 days from the date of receipt. Furthermore, business creditors cannot issue proceedings until 30 days from the date that they provide any documents requested by the debtor (if applicable).

Whilst initial pre-action correspondence may have been streamlined, the debtor is allowed a significantly longer period of time to respond to the Letter of Claim, and potentially this can seriously delay a business creditor recovering outstanding monies.  This not only affects a creditor’s cash flow but a debtor can may also dispose of assets during the pre-action period, making it harder for creditors to recover sums through enforcement.

Whilst in some cases, correspondence between the parties can narrow the issues in dispute with a view to settlement, quite often it is more a case of a debtor refuses to pay or is unable to pay and the protocol will have no effect on these sorts of debtors.

So what happens if a creditor decides to ignore the protocol and just issue proceedings for the full sum outstanding?

A creditor may find themselves in an unfortunate position of receiving costs consequences.  Even if successful a court may penalise a creditor for not following the protocol by limiting the amount that the creditor can claim in costs. It is extremely important therefore, that the creditors do not delay in starting the protocol.  Whereas in the past a creditor may be a little more relaxed about starting any action, with the protocol now firmly in place, a creditor should be thinking about recovery as soon as the invoice is past its due date.

With our help and experience we can help guide you through the process to recover your outstanding debts with as little delay as possible

If you are a business creditor and require assistance recovering a debt from an individual, please do not hesitate to contact us at for information and advice.

  • This field is for validation purposes and should be left unchanged.