In my recent blog Part 1: Debt recovery for businesses - a change in the law I explained the main points of the new rules and which claims the new Pre-Action Debt Protocol applies to. In this blog I'll discuss what you should include in the letter before claim.

As explained a Protocol can broadly be described as a set of conduct rules that the court would expect parties to follow, before issuing a claim in court.

It’s probably fair to say that before the introduction of this Protocol, it was usually fine to issue a brief letter before action to the person or sole trader owing you money, with hardly any notice before proceeding to court. Most of the standard templates gave 7 or 14 days’ notice of the intent of the creditor to issue proceedings in court.    

From 1 October 2017, if you are a business or public body claiming a debt from an individual or sole trader, you have to follow a new process. Please note, this does not apply to a business-to-business debt (unless the debtor is a sole trader) or where the debt is covered by another Protocol. The process requires that you issue a more detailed letter before claim with the following information:

  • The amount of the debt;
  • Whether interest or other charges are continuing;
  • The date of the letter, towards the top of the first page;
  • Details of the debt – for example if it’s based on an oral agreement you need to supply information on who made the agreement, what was agreed and when or where it was agreed;
  • If the debt arises from a written contract you need to supply information on the date of the agreement, the parties involved and we’d advise that you enclose a copy or state that it can be requested from the you (note that this last option is likely to delay the process)
  • Details of any assignment of the debt;
  • Details of any regular instalments that are currently being paid or offered, with an explanation as to why this is not acceptable and why a claim is still being considered;
  • How the debt can be paid, and what the debtor needs to do if they want to discuss payment options;
  • The address to which the reply should be sent.

The letter before claim should also enclose:

  • An up-to-date statement of account for the debt
  • An Information Sheet (found at Annex 1 of the Protocol)
  • A Reply Form (found at Annex 1 of the Protocol)
  • A Financial statement for the debtor to complete (example found at Annex 2 of the Protocol).

The letter must be dated, and posted out the same day or the following day. If you have additional contact information for the debtor, such as email address, you may also send it to that email address. If the debtor has explicitly stated that correspondence should not be sent by post, and provided alternative contact details, then you should use those details to send the letter. Please note you won’t be able to argue that a condition in your standard business terms constitutes an explicit request. 

In my final blog on this topic, we’ll consider what happens after you’ve posted the letter before claim. This is just a snapshot of the main points of the Protocol that you should consider. To read the Protocol with its full list of requirements; and to obtain copies of the Annexes that you need to include in your letter before claim, click here.

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