Skip to content

The New Pre-Action Protocol for Debt Claims – Part Two

In our News Roundup a couple of weeks ago we reported on the new Pre-Action Protocol for debt claims that came into force on 1st October 2017 and promised to write about this in more details which we began last week in Part One.  Last week we covered what creditors need to do in order to comply with the new Protocol so today we’re taking a look at what debtors will have to do in order to avoid matters escalating to the point where court proceedings are necessary.

If a debtor receives a letter of claim from the creditor, it must be answered within 30 days in order to avoid the creditor commencing court proceedings.  The debtor should use the reply form sent with the letter in order to respond and should also request copies of any documents they wish to see.  The response should include any documents that the debtor considers relevant (such as details of payments made but not accounted for in the creditor’s letter of claim) when responding.

If the debtor reveals that they are seeking debt advice, the creditor must allow the debtor a reasonable time period for the advice to be obtained and should therefore not begin court proceedings less than 30 days after receiving the completed form (alternatively, 30 days from the creditor providing documents requested by the debtor, whichever is later).  The creditor must also allow a reasonable time period for the debtor to obtain the advice.

If the debtor needs time to pay the sum involved, then the creditor and debtor will need to come to an agreement for the debt to be paid in instalments which should be based on the debtor’s income and expenditure.  If an agreement cannot be reached on this matter, the creditor must say why in writing.

In cases in which the debtor does not fully complete a reply form, the creditor should contact the debtor to discuss this and obtain any further information necessary to properly understand the debtor’s situation. 

In cases where the debt is disputed, both parties should exchange information and disclose documents which will enable them to understand each other’s positions.  The creditor should provide any document or information requested with an explanation of why the document or information is unavailable within 30 days of receipt the request to do so.

If, after all this, a settlement cannot be reached between the creditor and the debtor, both parties must take the appropriate steps to resolve the dispute without actually resorting to court proceedings.  This means using an alternative dispute resolution (ADR). 

If, after all of the above steps have been taken, an agreement still cannot be reached, then the creditor will need to give the debtor a minimum of 14 days’ notice that they intend to commence court proceedings in order to recover the debt.