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Pre-Action Protocol for Debt

Businesses need to be aware of a new legal process due to come into force in October which may see them having to wait longer to recover debts from clients.

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The new ‘Pre-Action Protocol’ is designed to cut the number of cases going to court but is also likely to cause delays for businesses.

The big change is that debtors will have 30 days rather than the current 14 day period to respond to a letter of claim.

The aim of the protocol is to encourage parties to communicate and exchange information about a debt at an earlier stage in the hope that court proceedings can be avoided, and also to encourage everyone involved to act in a reasonable and proportionate manner.

Many of our clients are naturally concerned that the increase in the notice period will lead to delays in settling a claim, but there are some potential advantages.

For instance, agreeing a repayment plan at an earlier stage will save on legal costs and court fees, and debtors may involve a solicitor earlier in the process which will actually lead to a speedier resolution overall.

Our main advice to businesses is to ensure they contact their solicitor as soon as possible when they have debts to recover so the claim can be instigated quickly.

And if anyone has any current debts, they should refer them to their solicitor now so they can issue a letter of claim before the new protocol comes into force on 1 October 2017.

The Pre-Action Protocol will apply to businesses claiming debts from any individual, sole trader or business, apart from limited companies or PLCs.

For more advice about debt recovery, contact me on 01952 211029 or email sian.samuel@lblaw.co.uk

 

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