On 1st October GL Law merged with national law firm Shakespeare Martineau as part of an exciting growth plan. To find out more read the full story here. If you have any urgent queries please reach out to your usual contact, email, or call 0117 906 9400.

Home > News > Claiming a debt? Know your obligations!

Claiming a debt? Know your obligations!

18 September 2017 | Richard Gore

From 1 October 2017, debt claims will be subject to a new Pre-Action Protocol, which should be followed before court proceedings are issued. Debt claims were previously governed by the “Practice Direction – Pre-Action Conduct and Protocols”, which was not tailored solely to debt claims. Make sure that you know the law by reading our expert guide below.

The new Protocol will apply to any business (including sole traders and public bodies) which is seeking to recover payment of a debt from an individual – which also includes a sole trader. The Protocol does not apply to business-to-business debts.

The Protocol aims to encourage the parties to attempt to settle the matter without starting court proceedings, something that all of us would usually prefer. Parties are required under the Protocol to engage and communicate with each other early on, including exchanging information relevant to the dispute.

Let’s use an example to explain how this works. John owes money to Rachel’s business, and so she is required to send a Letter of Claim to John prior to issuing court proceedings, and the Protocol sets out the information which it should contain. This includes an Information Sheet, a Reply Form, and a Financial Statement. There is guidance as to when and how the letter should be sent which any of our Dispute Resolution team will be able to help with.

John then has 30 days to reply. If no response is received, Rachel may start court proceedings – although we would also recommend that she waits a few days after the 30 day deadline expires. The Protocol warns that John may have posted his reply within the 30 day limit, but it may not be received until just afterwards.

John should use the Reply Form enclosed with the Letter of Claim. Rachel then cannot issue proceedings until 30 days have passed from receipt of the completed Reply Form or, if John has asked for additional documents, 30 days from the date that those documents are provided by Rachel, whichever is later.

If the Reply Form is only partially completed, then Rachel should attempt to contact John to discuss the matter further, and obtain any additional information needed for John to understand her position. If John indicates that he requires time to pay, Rachel should try to reach agreement with him for the debt to be paid by instalments, based on his income and expenditure. Where an agreement cannot be reached, Rachel should give John at least 14 days’ notice of her intention to start court proceedings, save in exceptional circumstances.

If an instalment arrangement is reached and Rachel later wishes to start court action, an updated Letter of Claim must be sent to John and the process started again.

As you can see, this new Protocol should remove the necessity for court proceedings in the majority of cases, with open communication being the key. However, from the creditor’s perspective, the requirements from 1 October 2017 are more onerous than previously. The timescales are longer and it could be easier for debtors to delay matters or wriggle out of payment completely.

If you have found it a challenge to collect a debt that is owing to your business, then you should speak to our Dispute Resolution team for support and guidance.


The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

  • What can we help you with?