The Civil Procedure Rule Committee has introduced new rules in relation to debt claims which will be governed by Pre-Action Protocol for Debt Claims and will come into force on 1st October 2017.
The new Protocol will apply to any business, sole traders and public bodies who are claiming payment of money (debt or alleged debt) from an individual including sole trader. Therefore, the Protocol will apply to a sole trader making a claim against another sole trader. However, this will not apply to business to business debts.
The aim is to encourage both parties to enter into early communication and exchange of information / documents regarding the debts. This will in turn enable the parties to resolve the matter without the need to start court proceedings. The idea is also to be cost beneficial to all parties to engage in early pre-litigation communication.
A creditor is required to send a Letter of Claim detailing the agreement, issues and how the debt can be paid etc. The Creditor cannot issue court proceedings within 30 days of sending the Letter of Claim. This is to allow the Debtor to review the Letter of Claim and prepare a detailed response setting out their issues etc.
The Court will take into account whether all parties have complied with the Protocol when giving directions for the management of proceedings. Therefore, failure to comply with the Protocol could result in the proceedings being stayed until the Protocol has been complied with, cost sanctions against the non compliant party or even the claim / defence being dismissed.
If you would like to discuss this further, please contact Sharon Matchwick or Rita Wright in our Debt Recovery Department on 01992 558 411
or email email@example.com