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Whether the debt is due from a business or an individual we provide a cost-effective service which takes into account the size of the debt, your circumstances and your priorities.
In respect of debts due to a business from individuals a Pre-action Protocol for Debt Claims (“the Protocol”) was introduced to make the process of debt recovery simpler. The Protocol affects the way your business can pursue debts against individuals and allows us to take the stress out of debt recovery for you.
Below is a summary of the initial procedure for debt collection by a business. The protocol outlined is comprehensive and includes adverse consequences, which can cost both time and money, if not followed properly.
Who does the Protocol apply to?
Subject to certain exceptions the Protocol applies to any business, including sole traders and public bodies who are claiming payment of a debt from an individual ( ‘individual’ includes a sole trader). The Protocol does not apply to business-to-business debts unless the debtor (the person who owes you the money) is a sole trader themselves. The Protocol should always be followed unless there is a need for urgent action.
What is the aim of the Protocol?
There are numerous aims but primarily it is to promote early communication between the parties including an early exchange of information about the debt to assist the parties in identifying the issues in dispute. Ideally this enables the parties to resolve the dispute in a way without the need for Court proceedings.
So why is the Protocol important?
Failure to follow the various steps and time limits set by the Protocol may lead to delay in your business recovering the debt, along with the real possibility of cost sanctions and reduced interest within any subsequent Court proceedings. It can adversely affect the nature of any subsequent Court proceedings for you therefore it is important to ensure that the correct process is applied to debt recovery from the start to save expensive delays.
What steps do you need to take under the Protocol?
You can no longer send a simple threatening letter giving a short period of time for the debtor to pay. Instead, the Protocol requires a ‘letter of claim’ to be sent which must contain specific information. Thereafter, there are further steps which must be taken before any Court proceedings are issued to seek payment of the debt in absence of payment by the debtor. The Protocol applies throughout the debt collection process and it important that it is correctly applied.
Can use of the Protocol be avoided?
Potentially yes. It depends on the nature of the debt and what, if anything, the debtor has said to dispute the debt. We can advise you on this and consider whether or not a statutory demand may be a more effective way of collecting the debt.
Whilst the Protocol does not apply to businesses seeking payment from other businesses nor to individuals seeking payment we can assist in seeking to recover any debt as sufficiently as possible.
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