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Our Ref: SLG 15 September 2017

Milk Round Software

Sent Via Email only

Dear Steve ,

Re: The new Pre-Action Protocol

On 1st October 2017, new Court rules will come into effect with regard to the recovery of debts from individuals. These include both business to business debts (i.e. sole traders) and personal debts. Many non-Limited companies are owned by sole traders (as opposed to being partnerships) and claims against them will therefore be subject to the new provisions and in the short term, I recommend that any proposed action against a sole trader or an individual be taken prior to the coming into force of the new Pre Action Protocol.

As is invariably the case these days, the new rules are completely in favour of the debtor. It will now be a requirement that a letter before action to an individual contains a vast amount of additional information and, crucially, the debtor will have 30 days to respond rather than the present 7 days.

In essence, a creditor will have to include with its letter before claim, a template information sheet and a reply form in all cases. The letter before claim should contain:

  1. The amount of the debt.

  2. Whether interest or other charges are continuing.

  3. 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.

  4. 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.

  5. Where the debt has been assigned, the details of the original debt and creditor, when it was assigned and to whom.

  6. 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.

  7. 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

  8. The address to which the completed reply form should be sent.

The letter should also:

  1. Enclose an up-to-date statement of account for the debt, which should include details of any interest and administrative or other charges added        


  1. 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



  1. 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:

  1. enclose a copy of the information sheet and the reply form in the form annexed to the protocol and

  2. enclose a financial statement form as annexed to the protocol


If the debtor doesn’t reply to the letter before claim within 30 days, the creditor may commence Court proceedings.

The debtor should use the reply form for its response. The debtor should request copies of any documents it wishes to see and enclose copies of any documents it considers relevant, such as details of payments made but not taken into account in the creditor’s letter of claim.

If the debtor indicates that it is 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 later.

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 debtor’s 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 debtor’s position.

If the debt is disputed the parties should exchange information and disclose documents sufficient to enable them to understand each other’s 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 its intention to commence Court proceedings (unless, for example, the limitation period is about to expire).

Until the new Pre Action Protocol has been in operation for a while, it’s difficult to know what sanctions the Court are likely to impose for failure to comply with it. I strongly suspect, however, that if a case comes before the Court, and the point is raised, the Court could well disallow the recovery of Court fees, legal costs, late payment compensation charges and the statutory interest.

If you have any queries arising from the above, please don’t hesitate to contact me for further advice.

Kind regards,

Steve Greenwood

The Greenwood Legal Partnership Limited T/as Greenwood & Co

Directors Michael J. Lane and Stephen L. Greenwood

Greenwood & Co Solicitors is a trading name of The Greenwood Legal Partnership Limited

Registered number 07079947. Registered office as above.

The Greenwood Legal Partnership is authorised and regulated by the Solicitors regulation Authority

(Registration No 74170)