Businesses that need to recover an outstanding debt should take note of new rules that come into force on 1st October 2017.
The Pre-Action Protocol applies to all businesses, including sole traders and public bodies, which are trying to recover debt from an individual, so explicitly excludes business-to-business debts unless both businesses are sole traders.
The aim of the protocol is to encourage early engagement and communication between parties, helping them to act in a reasonable and proportionate manner and support efficient case management. This process should also help parties to resolve the matter without the need to start legal proceedings.
From 1 October, businesses that want to recover a debt from an individual must send a letter of claim to the debtor before proceedings are started. This must contain:
The creditor must also enclose an up-to-date statement of account for the debt, which includes details of interest or other charges, together with an information sheet, reply form and a standard financial statement form for the debtor to complete, showing his/her current financial situation.
The debtor has 30 days to respond, before proceedings can begin.
If you have any questions or queries regarding the new Protocol or would like assistance recovering a debt, please contact us at The Debt Collection Centre.