Liam O’Shea, head of Astle Paterson’s Litigation and Debt Recovery Department, discusses a very recent addition to the debt recovery process, the Pre-Action Protocol, that could change your legal requirements.
Business disputes, especially when it comes to debt recovery, can feel like pulling your teeth out. To complicate things, the rules regarding correct legal processes change regularly. But while they may seem confusing, at heart these rules are trying to make debt recovery as painless as possible. A recent addition to the rules, the Pre-Action Protocol, attempts to give more time for the dispute to be resolved before creditor takes it to court.
The new rules apply to creditors that want to issue a claim against an individual (including sole traders). As of 1st October 2017, Formal action against the debtor must start with the sending of a formal Letter of Claim, with a blank reply form and a financial statement. The reply form is to confirm whether or not they accept that the debt is due, while the statement is to set out their financial position so both parties can negotiate a payment arrangement.
Once the Letter of Claim is received, the creditor must wait at least 30 days for a response before issuing proceedings. However, once the debtor has returned the required information, the creditor must then wait another 30 days from the receipt of this reply. This essentially creates a buffer of 60 days that the creditor must wait before taking the dispute to court. Of course, this is an extra two months for the dispute to be resolved organically.
If a business creditor issues any proceedings having failed to follow the Pre-Action Protocol, they are likely to be met with criticism by the court.
I would therefore advise that if you are owed money you should consider starting formal action swiftly, given the increased time that must have passed before you are entitled to seek recovery through the court.
Should you need assistance or advice on recovering a debt, I would be happy to meet you to discuss the matter on an initial fixed fee interview. Please feel free call me on 01283 743965 or email firstname.lastname@example.org.
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