Debt recovery claims: Pre-action Protocol

If you are a creditor (business, sole trader or public body) claiming payment of a debt from an individual (including a sole trader) then you are obliged to comply with the Pre-Action Protocol for Debt Claims, which came into force from 1 October 2017.

Do I need to follow the pre-action protocol?

The pre-action protocol does not apply to business to business debts (unless the person who owes money is a sole trader).

You- the creditor- must be a “business” claiming payment of a debt from an individual. “Business” is not defined in the Debt Protocol, therefore a creditor must be advised whether they are considered a business or not- guidance on this point is elaborated upon in Financial Services Authority v Anderson [2010] EWHC 599 (Ch).

What is the debt recovery pre-action protocol?

The pre-action protocol is in essence a rule book that a creditor must follow before a creditor commences debt recovery court action.

The overriding objective in the Civil Procedural Rules (CPR) states that wherever possible, parties in a dispute should endeavour to avoid court proceedings.

Are there sanctions for not complying with the pre-action protocol?

If you as a creditor business is owed money by an individual debtor (for example for unpaid fees), it is recommended that you seek legal advice from specialist debt recovery solicitors. Legal advice is recommended given that failure to follow the specific pre-action steps could lead to the court imposing sanctions on the non-compliant party.

If a debtor owes money why should a creditor follow the pre-action protocol?

The pre-action debt protocol promotes early communication between the creditor and the debtor which enables an early exchange of information about the debt which will assist in identifying what the issues are in dispute.

Following the pre-action protocol may also be a more cost-effective way of securing payment of a debt without going to court. Following the pre-action protocol also means other options can be pursued first before the nuclear option of court proceedings, such as agreeing to a repayment plan or utilising alternative dispute resolution such as arbitration, mediation or without prejudice discussions.

Letter of Claim

Before court proceedings are commenced, a creditor should consider sending a Letter of Claim to the debtor.

The Letter of Claim should contained the following information:

  • the amount of the debt;
  • whether interest or other charges are continuing;
  • where the debt arises from an oral agreement, who made the agreement, what was agreed (including, as far as possible, what words were used) and when and where it was agreed;
  • where the debt arises from a written agreement, the date of the agreement, the parties to it and the fact that a copy of the written agreement can be requested from the creditor;
  • where the debt has been assigned, the details of the original debt and creditor, when it was assigned and to whom;
  • if regular instalments are currently being offered by or on behalf of the debtor, or are being paid, an explanation of why the offer is not acceptable and why a court claim is still being considered;
  • details of how the debt can be paid (for example, the method of and address for payment) and details of how to proceed if the debtor wishes to discuss payment options;
  • the address to which the completed Reply Form should be sent;
  • enclose an up-to-date statement of account for the debt, which should include details of any interest and administrative or other charges added;
  • enclose the most recent statement of account for the debt and state in the Letter of Claim the amount of interest incurred and any administrative or other charges imposed since that statement of account was issued, sufficient to bring it up to date;
  • where no statements have been provided for the debt, state in the Letter of Claim the amount of interest incurred and any administrative or other charges imposed since the debt was incurred;
  • enclose a copy of the Information Sheet and the Reply Form at Annex 1 to the Pre-action Protocol for Debt Claims; and
  • enclose a Financial Statement form (an example Financial Statement is provided in Annex 2 to the Pre-action Protocol for Debt Claims – the Statement is part of the Standard Financial Statement and can be downloaded from

How should a debtor that disputes the debt respond to the Letter of Claim?

A debtor must within 30 days of the Letter of Claim complete and return the Reply Form; they can request copies of any documents they wish to see and also enclose copies of any relevant documents.

Depending on the particular circumstances, a debtor should be advised to consider (in the pre-action stage) making a without prejudice (save as to costs and subject to contract) offer in full and final settlement of the debt claim (also known as a Calderbank offer).

Can a debtor delay court proceedings being issued?

If the debtor is seeking legal advice, then a creditor must allow a reasonable period of time for the debtor to obtain said advice. However, the Pre-action Protocol for Debt Claims does not define what a reasonable amount of time is.

What are the consequences of a debtor not responding to a Letter of Claim?

If the debtor does not replay to a Letter of Claim within 30 days, then you as the creditor may commence court proceedings having satisfied the Pre-Action Protocol for Debt Claims.

Instruct Specialist Debt Recovery Lawyers

We provide a no cost initial case review to establish whether or not we can help you. We are a specialist City of London law firm made up of Solicitors & Barristers and based in the Middle Temple Inns of Court adjacent to the Royal Courts of Justice.  We are experts in dealing with matters surrounding insolvency in particular issues.  Our team have unparalleled experience at serving statutory demands, negotiating with debtors/creditors, setting aside statutory demands and both issuing and defending winding up petitions vigorously at the Royal Courts of Justice (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules.

Our expert Winding Up Petition and Insolvency Solicitors & Barristers provide professional and specialist legal advice to guide you to the best legal outcome. Our team of London lawyers are based in Middle Temple adjacent to the Royal Courts of Justice. For your case assessment and for more information about our legal services get in touch using our online form, ☎ 02071830529 or email us on [email protected].
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