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Changes to Debt Protocol

Forbes Collect Article

22 March, 2016

A draft Pre-Action Protocol for Debt Claims was drawn up in September 2014 by the Civil Procedure Rule Committee (CPRC). However, after criticisms and a recommendation by Lord Justice Jackson in his final report reviewing civil litigation costs, the CPRC have been consulting on a new draft Debt Protocol.

The original draft Debt Protocol required that debtors should be provided with the following key information to enable them to obtain advice prior to proceedings:-

• a letter of claim beginning with a notice prescribed in the protocol with copies of the protocol
• a full statement of account detailing all payments made by the debtor
• details of the original debt and creditor and assignments of the debt together with details of the relevant notices of assignment
• details of how the money can be paid and contact details for the organisation
• the contract or agreement between the parties or details of the agreement if it was made orally
• the defendants reply form together with a self-addressed envelope
• the organisation must also highlight the importance of obtaining independent legal advice and where it can be obtained from

The above points have raised concerns by several consultees with regards to how much information creditors would be required to provide and in response to these concerns, the Debt Protocol has been restructured to reduce the amount of documentation that creditors are required to provide.

The Civil Justice Committee (CJC) has suggested a two-stage approach, whereby some information is to be provided to debtors in the ''Letter of Claim'' and all other information being available upon request (with debtors being prompted to consider what more information they want/need).

The restructured Protocol will reduce the amount of information that the creditor has to supply to the debtor, however, debtors will need to be provided with an Information Sheet which will include their rights and obligations under the Debt Pre-Action Protocol, all set out in plain English. This will make it easier for the debtor to understand as well as lessening the burden and the cost to creditors (which were both concerns with regards to the original Debt Protocol). Along with the Information Sheet, it is recommended that debtors should be given a 'reasonable' amount of time to respond to the Letter of Claim and proceedings should not be issued within 30 days of sending it out.

The idea of this is that this will be facilitated by an early exchange of information to clarify disputed debts, the main aim being to ensure that enough information is given about the alleged debt to enable debtors to seek advice which may encourage an earlier settlement, also allowing business relationships to be maintained.

With the new Debt Protocol in mind, it would be a good idea for Creditors to take action with debts sooner rather than later therefore, our Debt Recovery Team can assist with providing information on how to tighten up on Credit Control procedures. In addition to this, they can assist with chasing outstanding invoices to ensure prompt payment to assist with your cash flow for Creditors.

If you are looking for any more information with regards to our services view our Debt Collect section. You can also contact Alison Nelson or Katy Morris in our Debt Collect department on 01254 222317. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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