Pre-Action Protocol for Debt Claims

The Pre-Action Protocol for Debt Claims came into force on 1 October 2017. The Protocol applies to any business (either a partnership, sole trader, public body or in limited form) when claiming debt from an individual. However, it does not apply to business-to-business debts.

What do these changes mean?

The process of recovery of debts is more protracted for creditors. Simply put, the debt will be outstanding for longer and a creditor will no longer be able to put pressure on a debtor with the prospect of imminent court proceedings.

Letter before Action

The ‘LBA’ should now include:

  • The debt amount
  • The amount of interest/charges and whether they are continuing. A separate up to date statement of account for the debt together with interest and any charges should be sent separately if not included on the letter
  • The creditor must offer to send a copy of any document to confirm the terms of the agreement that were reached
  • The creditor may include a brief account of any verbal agreement.
  • If a debtor has already offered a payment and it is not accepted by the creditor – the creditor must state why it has rejected
  • The LBA must also give details of how the debt can be paid – including options for payment

Information to be sent with the Letter before Action

  • Information Sheet
  • Reply Form
  • Financial Statement Form

The Letter before Action must be sent by post (it can also be emailed additionally)

  • The debtor will have 30 days to respond to a letter of claim.
  • The burden of responsibility falls to the creditor to provide documentation (in a specific format) to accompany a letter of claim

Debtor’s Reply

  • The debtor is required to use the Reply Form for their response
  • Request copies of the documents they wish to see
  • The debtor can also include any documents they consider relevant with their response
  • If the debtor indicates they are seeking advice regarding the debt, a creditor must allow a reasonable amount of time for this to happen. In essence, they cannot commence proceedings before 30 days have elapsed from receiving the Reply Form

What is the aim of the Protocol?

  • To encourage early engagement, communication and exchange of information between the parties
  • To enable the parties to resolve a matter without the need to commence court proceedings. This can include agreeing a payment plan or considering using an Alternative Dispute Resolution (ADR) procedure
  • To encourage the parties to act in a reasonable and proportionate manner (to stop some creditors using the proverbial ‘sledgehammer’ to crack a nut!)
  • If proceedings cannot be avoided, to support them

What if a creditor does not comply with the Protocol?

  • Additional delays could be encountered if legal proceedings are stayed to remedy a failure to comply with the Protocol
  • Interest may not be added or at the very least, the amount may be reduced
  • The creditor could end up facing the debtor’s legal costs or face other sanctions

Bearing in mind the implications of ‘bad debts’ and concerns around cash flow, businesses need to give greater consideration to who they choose to give credit to in the future.

What can a creditor do?

  • Give greater consideration to credit limits offered
  • Ensure effective credit control
  • Consider passing debts over for legal action sooner
  • If the debt is over the £5,000 threshold and is not disputed – consider insolvency proceedings which now appear to perhaps be quicker than issuing a County Court Claim.


For further information, please do not hesitate to contact a member of the debt recovery team.

To view the full protocol, please click here.