- 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 and
- 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 or
- 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 or
- 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 in the form annexed to the protocol
- enclose a financial statement form as annexed to the protocol
PROTOCOL CAN BE ACCESSED AT www.justice.gov.uk/courts/procedure-rules/civil/pdf/protocols/pre-action-protocol-for-debt-claims.pdf
If the debtor does not reply to the letter before claim within 30 days, the creditor may commence court proceedings.
The debtor should use the reply form for their response. The debtor should request copies of any documents they wish to see and enclose copies of any documents they considers relevant, such as details of payments made but not taken into account in the creditors letter of claim.
If the debtor indicates that they are seeking debt advice, the creditor has to allow the debtor a reasonable period for the advice to be obtained and should not commence court proceedings less than 30 days from receipt of the completed reply form or 30 days from the creditor providing any documents requested by the debtor, whichever is the latter.
The creditor should also allow reasonable extra time for the debtor to obtain that advice where it would be reasonable to do so in the circumstances.
If the debtor requires time to pay, the protocol requires the creditor and debtor to try and reach an agreement for the debt to be paid by instalments, based on the debtors income and expenditure. If the creditor does not agree to a proposal for repayment of the debt, it should say why in writing.
If the debtor fails to fully complete a reply form the onus is on the creditor to contact the debtor to discuss and obtain any further information needed to properly understand the debtors position.
If the debt is disputed the parties should exchange information and disclose documents sufficient to enable them to understand each others position and the creditor must provide any document or information requested or explain why the document or information is unavailable within 30 days of receipt of the request.
If settlement still cannot be reached the parties are obliged to take appropriate steps to resolve the dispute without commencing court proceedings and, in particular, should consider the use of alternative dispute resolution (ADR).
If an agreement still cannot be reached, the creditor should give the debtor a minimum of 14 days notice of their intention to commence court proceedings (unless, for example, the limitation period is about to expire).
What does all this mean for creditors?
Without doubt, the process of recovery of debts will be more cumbersome for creditors:
- Creditors are required to provide more documentation to debtors in specific formats
- There is increased scope for delaying collection by intransigent debtors who can delay payment by up to 90 days
- Creditors will need to be more pro-active when engaging with debtors to ensure information is properly exchanged and time periods met
- Additional costs and delays could be incurred particularly if ADR is triggered and
- A review of existing recovery processes and changes may be necessary
What happens if creditors fail to comply with the Protocol?
Failure to comply with the Protocol may result in:
- Further delay in collection of debts if any legal proceedings are stayed to remedy failures to comply with the Protocol
- Additional costs sanctions in terms of payment of the debtor legal costs or a failure to recover costs and
- Inability to recover interest from a debtor or recovery at a reduced rate.