Chris Chan

Associate and Commercial Recoveries Manager

Dispute Resolution


New Pre-action Protocol for Debt Claims

Chris Chan

On 1 October 2017, the Pre-Action Protocol for Debt Claims comes into force. The Protocol applies to any business, including sole traders and public bodies, seeking to recover payment of a debt from an individual debtor. The Protocol does not apply to business debts unless the debtor is a sole trader.

It is important to note that if another Pre-Action Protocol applies to the debt (e.g. a construction contract) then the Protocol will not apply.

The purpose of the Protocol is to encourage early settlement to avoid court proceedings. It is also intended to promote early communication between the parties and settlement by way of Alternative Dispute Resolution such as mediation.

The Protocol is designed to encourage the parties to act reasonably and proportionately with regard to the size of the debt. The Court may exercise its discretion when it comes to costs if a party is found to have incurred an unreasonable and disproportionate amount of costs particularly if the size of the debt is considered to be of low value.

What the creditor needs to do

The creditor is required to send a letter of claim to the debtor, which should contain the following information:

  • Amount of the debt.
  • Whether interest or other charges are accruing.
  • If the debt arises from an oral agreement, who made the agreement, what was agreed, and when and where it was agreed.
  • If the debt arises from a written agreement, the date of that agreement, the parties and the fact that a written copy can be requested from the creditor.
  • A statement of account detailing the debt, including the amount of interest and any other charges imposed since the debt was incurred.
  • Where the debt has been assigned, details of the original debt and creditor, when it was assigned and to whom.
  • If the debt is currently being paid on behalf of or by the debtor, an explanation of why these payments are not acceptable and why proceedings are being considered.
  • Details of how the debt can be paid, and what the debtor can do if he or she wishes to discuss payment options.


The letter of Claim also needs to enclose the Information Sheet and Reply Form at Annex 1 of the Protocol and a financial statement for the debtor to complete; an example of which can be found at Annex 2 of the Protocol.

The debtor should be given 30 days to respond. If the debtor does not provide a reply within this time the creditor may issue court proceedings, provided that it has given 14 days’ notice to the debtor of its intention to do so.

What the debtor needs to do


The debtor should first consider the creditor’s letter of claim and respond by using the enclosed Reply Form. Early exchange of documents is encouraged by the Protocol and the debtor can request or provide completed relevant documents. The creditor must not issue court proceedings less than 30 days from receipt of a Reply Form or 30 days from providing the debtor with documents requested, whichever is later.

The creditor must give the debtor a reasonable period to seek independent legal advice if the debtor indicates a wish to do so.

Disclosure of documents

The parties should help each other understand each other’s position by exchanging and disclosing documents at an early stage. If receiving the debtor requests further information and/or documents, the creditor must provide them within 30 days of request.

Failure to comply with the Protocol

The court will consider any non-compliance when giving directions for case management and it may also result in costs sanctions.

Notice of intention

The creditor should give the debtor at least 14 days’ notice of its intention to issue court proceedings if the debtor has responded to the letter of claim but a settlement has not been reached. There are exceptions to this rule particularly if limitation is an issue.

What this means

The Protocol clearly makes the recovery of debt more onerous and costly for creditors and it can have an adverse effect on the creditor’s business as payment can be delayed for a long period of time due to the requirements set out in the Protocol.

To assist cash flow, creditors will need to be more proactive and seek to recover debts as soon as they become overdue as well as ensuring that they keep good documentary records from the outset.

Fraser Brown’s specialist debt recovery department can assist with your collections. If you require further information regarding our debt recovery service, please do not hesitate to contact Chris Chan on 0115 947 1517.


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