Debt Claim Pre Action Protocol explained

The Pre Action Protocol for Debt Claims comes into force from October. The new protocol could have implications for businesses with outstanding debts due from individuals, as Kally Singh, Partner at Hegarty Solicitors explains

The Protocol…
… will apply to any business claiming payment of a debt from an individual or sole trader. The … does not apply to business-to-business debts, unless the Debtor is a sole trader.
… aims to encourage early communication between parties, including the early exchange of information about the matter to help clarify whether there are any issues in dispute, so that the parties can hopefully resolve the matter without having to progress to court proceedings.

The Protocol includes actions such as:
• Agreeing a repayment plan;
• Using Alternative Dispute Resolution;
• Encouraging the parties to act in a reasonable and proportionate manner and to take into account the amounts claimed;
• Support the efficient management of proceedings that cannot be avoided.

The Creditor is required to send a Letter of Claim to the Debtor before proceedings are started. The Letter of Claim should set out the amount of the debt, the amount of interest and how the debt arose, along with details of how the debt can be repaid. The Letter of Claim should also include a copy of an Information Sheet and Reply Form, together with a Financial Statement Form, which must be attached. The Letter of Claim has to be sent by post, unless the Debtor has made an explicit request that it should be sent by an alternative contact procedure. The Debtor then has 30 days within which to respond. If no response is received, court proceedings could be commenced. The Debtor should use the Reply Form to respond to the Creditor. The Debtor can request copies of any documents they wish to see and enclose copies of any documents they consider relevant which may not have been taken into account in the Creditor’s Letter of Claim. If the Debtor is seeking debt advice, the Creditor must allow the Debtor a reasonable period for the advice to be obtained. Court proceedings should not be commenced less than 30 days from the receipt of the completed Reply Form. If the Debtor has suggested time to pay, then the parties should try to reach an agreement based upon the information contained within the Financial Statement.

The aim of the Protocol is for the parties to engage in early communication in order to try and resolve matters and to disclose documents. Alternative Dispute Resolution should be considered in order to resolve matters without the necessity of Court proceedings. If the matter is to proceed to Court, then the Court will expect the parties to have complied with the Protocol. The Court will take into account non-compliance when giving directions for the management of proceedings. The Court can, in appropriate circumstances, impose cost sanctions against a party, which does not comply with the Pre Action Protocol for Debt Claims. For businesses the new protocol places emphasis on trying to resolve disputes before a claim is issued. Although the new Protocol may mean there is more work involved before a debt claim can be issued, businesses should be aware that compliance with the Protocol is essential, especially if Court proceedings are commenced.

Kally Singh is a partner at Hegarty Solicitors with over 25 years’ experience. Kally specialises in all areas of commercial litigation, including debt and insolvency. For advice about debt, insolvency and recovery, contact Kally Singh on 01733 295642 or email

Hegarty Solicitors: 01733 346333,


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