Pre Action Protocol for Debt Claims
New procedures have come into force in respect of debt claims from the 1st October 2017, this new protocol may affect outstanding debts that your business may have and the way in which you can pursue these debts in the future.
The new Pre Action Protocol for Debt Claims has been set down by the Government and must be utilised in all debt claims from the 1st October 2017. The new rules set out a process which must be followed in order to recover outstanding debt. Failure to follow this Protocol will result in cost consequences and may affect your company’s ability to recover the debt.
The Protocol affects any debts claimed by a business against an individual or a sole trader. It does not affect claims by a business against a company or partnership.
The Protocol requires that the letter before claim must contain the following specific information:-
- The amount of the debt owing.
- Any interest charges already added and accruing.
- Is there any agreement in place between the parties whether it be in written or oral. If the agreement is in writing a copy of the agreement must be provided on request.
- Has there been any assignment of the debt and if so the original creditors details must be provided along with the date of the assignment.
- If there is an instalment plan in place you have to provide details as to why this is no longer acceptable.
- Payment details must be clear and concise and must show methods of payment and to whom payment should be made.
- In addition to the above information documentation needs to be supplied to the debtor including an information sheet, a financial information form and reply form. The debtor will have 30 days to respond or request further information.
This Protocol will have far reaching effects on the way you do business and will almost certainly mean that you will need to change your credit control systems. If you would like to discuss the information provided and how best to put procedures in place within your company to ensure that you provide the required information please do not hesitate to contact Lynne Branchflower or Gareth Archer on 0113 2444227 (Leeds) or 01226 733 533 (Barnsley)
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