All Change for Debt Recovery Claims

14th Sep 2017

At present when a letter of claim is sent relating to a debt claim and a request for payment is made, generally speaking a 7 – 14 day period for payment of the debt is requested before alternative action is taken. This is all about to change. What are the key changes?

Debt Recovery

From 1st October 2017, a new Pre-Action Protocol is coming into force for debt claims. The new Protocol will apply to businesses wishing to pursue the recovery of a debt although the Protocol will not apply to business to business debt unless the debtor is a sole trader.

The aim of the Protocol is to encourage early engagement and communication between the parties with an early exchange of details and documentation in an attempt to resolve the matter without the need for the issue of Court Proceedings and to certainly encourage Alternative Dispute Resolution (ADR) between the parties.

Prior to any Court proceedings being commenced, the Creditor will be required to send to the Debtor a letter of claim which will need to include specific information, including:-

  • The amount of the debt
  • Whether interest or charges have been incurred and whether these are continuing
  • How the debt arose, either by way of oral agreement or written agreement (and any supporting documentation)
  • If instalments are being offered or paid, an explanation as to why these are not acceptable
  • Details of how the debt can be paid
  • An Information sheet and Response form

The requirements of the new Protocol mean that the Debtor has a period of 30 days from the date of the letter of claim in which to respond to the Creditor on the prescribed form. If the Debtor does not respond within this time then the Creditor will be able to proceed with the issue of Court Proceedings. Our concern is that this will adversely affect cash flow for businesses, but there is some comfort that it does not apply to business to business except for a sole trader.

In some cases, especially where the debt is large, mediation (a third party facilitating a resolution) might be appropriate. It’s important, however, to balance the potential costs of any mediation against the amount of the actual debt.

The mediation could simply take the form of discussion and negotiation, or it may involve a more formal process such as a complaint to the Financial Ombudsman Service, where the dispute concerns a debt regulated under the Consumer Credit Act 1974.

Rogers and Norton’s specialist Debt Recovery and Insolvency Team acts for National Companies, Finance Companies, local businesses and schools. We can advise on all forms of debt recovery, enforcing judgments, retention of title claims and insolvency proceedings.

Should you have any questions or need help with debt recovery you can contact me at or 01603 675613 or my colleague Elizabeth Gibson at or 01603 675641.