Pre-action Protocol for Debt Claims

Aims of the protocol and who it applies to:

On 1st October 2017 it became a requirement for any business including sole traders and public bodies, to adhere to a new Pre-Action Protocol for debt claims. This means that all businesses must carry out a stringent process prior to submitting a legal claim for an outstanding debt where the debtor is a consumer, sole trader or partnership of 3 or 2 individuals. The requirement does not apply where the debtor is a Ltd company or larger partnership, but it does apply in personal guarantee claims.

Whilst the Protocol’s stated aims are to encourage early engagement to help both parties to resolve the matter and avoid court proceedings, the procedure will undoubtedly put more pressure on SME’s already struggling with late payment. To adhere to the protocol the creditor must send detailed information to the debtor in a required format, adhere to timelines which allow the debtor 30 days to respond, and can mean that the creditor cannot begin litigation for more than another 60 days.

Sterling Debt Recovery’s service complies with the new requirement where necessary, managing the process on behalf of our clients, to achieve payment as quickly and as cost effectively as possible. Please contact us if you have any queries.

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Categories: Accountancy, Business, credit control, Debt, late payment, Legal, News

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