New Pre-Action Protocol for Debt Claims

On 1 October 2017, a new Pre-action Protocol for debt claims came into force. This will have a significant impact on people and businesses involved in debt claims, or hoping to make a debt claim, so we sat down to answer your questions.

What is a Pre-action Protocol?

Before cases get to court, there are a number of boxes the parties need to tick. People making a claim need to outline their case clearly, show their evidence, and give the other side reasonable time to respond before going to court. Pre-Action Protocols make sure that every claim follows the same process and nobody gets caught out.

Will it make a difference to debt claims?

Until this week, debt claims were included under the old Practice Direction for Pre-Action Conduct which governed the steps claimants and defendants needed to take when making a claim. The Practice Direction, however, didn’t offer specific guidance for debt claims. The new Protocol is specifically tailored to help both people making a claim, and people facing a claim with step-by-step guidance, clear deadlines, and standard forms that cover all the information required. Having a specific Protocol designed for debt claims will make it much more straightforward both to bring a claim and to defend a claim.

Why is it a good thing?

At Bridge Law we want to make the legal process as clear and as cost-effective as possible for all our clients. Having a specific Pre-Action Protocol will help our clients where it matters most, and increased clarity means that costly mistakes will be much easier to avoid. Courts will consider how the parties have acted since the case began and can penalise you if they believe you deliberately made it difficult for the other side, whether you’re claiming or defending.

The detailed standard forms mean that all the relevant information gets shared early on in the dispute, and both sides will be well placed to see how strong their arguments are. This is good news for clients, as it can help you avoid extortionate and unnecessary court costs. There’s a big emphasis on resolving issues through negotiation and finding the best solution for the clients; something that matches up with our ethos here at Bridge Law.

What does it mean in practice?

The Protocol only changes debt claims for ‘any business’ claiming payment of a debt from an individual, so debt claims between individuals or between big businesses aren’t included. If you, as an individual, are owed money this new Protocol doesn’t apply to you, nor does it apply if you’re a business owed money by another business (except for a sole trader who counts as an individual).

If your debt claim is covered by the new Protocol, it’s important that you follow it carefully in order to avoid being penalised should it get as far as court.

I’m involved in a debt claim – what should I do?

Of course, no system is perfect, and making or defending a debt claim against you can be daunting and confusing. The new timescales in the Protocol might mean that people try to delay paying the money, and there’s always the possibility that things might not get resolved and you have to go to court anyway.

This is only intended as a general introduction to what the change in the law means, and should not be relied upon if you are making or defending a claim. For specific advice relating to a case, Bridge Law is on hand to help. Ring the team in the office on 0161 427 0084 for more information and to arrange a consultation.