THE NEW PRE-ACTION PROTOCOL FOR DEBT CLAIMS

“At first glance it might appear that the changes will significantly weaken the position of a business claiming a debt, as the guidance puts a greater burden on creditors to provide historical information.

My view is that creditors will be more determined to issue court proceedings and the changes to the protocol will simply result in businesses seeking legal advice at an earlier stage.

Creditors will no doubt tighten up their internal processes so that it becomes harder for an individual to borrow money or get credit.

Whilst the aim of the Protocol may have been to reduce litigation and provide extra protection for consumers I think the reality is more bureaucracy, more costs and more litigation.”

Kerry Underwood

By Anna Patsalides, Solicitor, Underwoods Solicitors

On 1 October 2017, a new pre-action protocol for debt claims came in to force which can be found here.

The Protocol describes how the court expects parties to act before legal proceedings are commenced.

This will apply to business creditors seeking to recover debt from an individual or a sole trader.

The new protocol increases the amount of work which a creditor must do, even in a simple debt claim.

The changes in the protocol will mean that the court will be able to look at both parties behaviour before a case is issued at court.

The purpose of the new pre-action protocol is to encourage parties to communicate and for information to be exchanged at an early stage to avoid the need for court proceedings.

The aim of the new changes is to keep costs down so that they are reasonable…

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