Are you owed money by individuals or sole traders?
If so, time is running out to take legal action on those claims before onerous new protocols come into effect on the 1st October 2017.
If you are considering legal action, you want to act fast before those protocols come into effect and such action becomes more burdensome.
We recommend members review their ledgers/cases and refer for litigation any aged debts relating to individuals and/or sole traders now so court proceedings have been commenced before the changes take effect!
CPA’s debt recovery and litigation department is highly effective and if your debt is as a result of a business to business transaction (even if they are a sole trader), the debt is undisputed and your debtor is still at the address and solvent then all collection costs, legal fees, interest and late payment compensation are added to the debt and recoverable from the debtor.
Pre-Action Protocol for Debt claims from individuals and sole traders
A new Pre-Action Protocol for Debt claims will come into force on 1st October 2017.
The Protocol applies to all debt claims where a business is claiming payment of a debt from an individual irrespective of the value of the debt. The definition of “business” includes a sole trader and public bodies in business and “individual” appears to include a sole trader.
The new Protocol aim is to:
• Encourage early engagement and communication between the parties;
• Achieve settlement of claims without recourse of the Courts including setting repayment plans and alternative methods of resolving disputes;
• Encourage parties to act in a reasonable and proportionate manner;
Therefore, early disclosure is going to be essential under the pre-action protocol. An enhanced Letter of Claim which must detail the basis of the claim, including the details of any written or oral contract, and any charges and interest which have been added to the debt is required. Further, a Statement of Account, Information Sheet, Reply Form and Financial Statement are all to be enclosed with a Letter of Claim. Debtors will have 30 days to respond to a Letter of Claim and can request additional information and documentation during this period which must be supplied.
If a debtor indicates a need for time to pay, both the creditor and debtor should try and reach an agreement to permit 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, they will need to give reasons for this refusal in writing.
The new Protocol places the onus firmly on a claimant to make sure that the debtor is provided with a lot more information at the time of legal demand than is customary at present. However, it is hoped the provision of this information at an early stage will be likely to promote settlement of claims, identify and narrow issues and areas of dispute and ultimately reduce the need to reference matters to the Court for determination.
Failure to observe the new Protocol will expose the claimant to an adverse costs order being made by a Court or interest penalties.
If you have any questions, please do not hesitate to contact CPA’s Litigation Department on 020 8846 0000
see our blog from earlier this year
Ray White – Litigation Manager -4th September 2017
Give us a call on 0330 053 9263 or get in contact.