Written by
Philip Young
Founder of Garfield
Table of contents:
Objectives of the Pre-Action Protocol for Debt Claims
Conclusion
The pre-action protocol for debt claims
Learn about the Pre-Action Protocol for Debt Claims in English Courts, its objectives, and how it encourages early communication and resolution between creditors and debtors.
The Pre-Action Protocol for Debt Claims is an integral part of the civil litigation process in the English Courts, designed specifically for cases where a business (including sole traders and public bodies) is claiming payment of a debt from an individual (including a sole trader). The protocol does not apply to business-to-business debts unless both businesses are sole traders. Its primary purpose is to encourage early engagement and communication between the parties, enable the parties to resolve the matter without the need to start Court proceedings, and encourage the parties to act in a reasonable and proportionate manner in all dealings with one another.
Objectives of the Pre-Action Protocol for Debt Claims
The key objectives of the protocol include:
- Early Communication: The creditor should send a clear and detailed Letter of Claim (aka Letter Before Action) to the debtor before commencing proceedings, which should include specific information to help the debtor understand the amount of the debt, how it arose, and how it can be paid. This letter should also include an up-to-date statement of the account, details of any interest and administrative charges being claimed, and an Information Sheet and Reply Form as specified in the protocol.
- Providing Documents: The protocol requires creditors to provide debtors with a clear and concise form of documentation, either with the Letter of Claim or promptly upon request, including the original agreement under which the debt arises, a statement of the account showing how the debt has accrued, and any assignment of the debt to a third party.
- Encouraging the Use of ADR: Alternative Dispute Resolution (ADR) methods, such as mediation and conciliation, are encouraged to settle matters without the need for litigation. The protocol emphasizes resolving issues through negotiation and discussion, avoiding court proceedings which can be costly and time-consuming.
- Proportionate Actions: The actions taken by all parties should be proportionate to the amount of debt owed. This includes considering whether the costs of recovering the debt are balanced against the amount of debt itself.
Conclusion
The Pre-Action Protocol for Debt Claims serves as a framework to facilitate early settlement of debt-related disputes, reducing the need for Court involvement and encouraging communication, documentation exchange, and fair dealings between creditors and debtors. Adhering to the protocol not only helps in streamlining potential legal proceedings but also in preserving relationships between parties by promoting resolution through cooperation and understanding.