• Emma Harrison

Business to individual debts

Are you aware that in January 2018 pre court procedure for chasing individuals through Court as a business has changed?

So for example, if an individual landlord owes you money, a tenant owes you fees, or maybe you have overpaid a ex member of staff, if you wanted to pursue them through Court, you show compliance with the new pre action protocol (which forms part of the rules of going to court). This does not apply to business to business debts.

What has changed?

A new “letter before claim” must contain the following information:

  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 creditor 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 or

  2. 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 or

  3. 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

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

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

If the debtor does not reply to the letter before claim within 30 days, the creditor may commence court proceedings. If the debtor, does reply, then further time must be allowed as reasonable to try and negotiate matter.

What does this mean in reality?

For those who are looking to pursue through Court, then the requirements become much more onerous. From sending a more detailed letter, allowing more time, ensuring evidence of communications are kept and exploring all other alternative dispute mechanisms, this will undoubtedly trip up the uneducated claimant. The sanctions, could be a debt claim being dismissed, to the claimant being liable for the legal costs of the debtor (which may run into more than you are claiming).


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