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Debt Pre-Action Protocol - 1st October 2017


Debt Pre-Action Protocol

Civil justice in England and Wales is well known for having prescribed overtures to the litigation procedure. These are termed "Pre Action Protocols" (PAPs). The word "protocol" suggests a rigidity which falls slightly short of the Civil Procedure Rules themselves, and terminology does indeed imitate reality. Sanctions for not following a protocol have not been as draconian, or as rigidly enforced, as the rules themselves, but the courts do expect compliance where possible.

For years now, there have been formal PAPs for numerous differing areas of legal dispute, such as clinical negligence, housing disrepair, construction, injury and industrial disease. Until now, however, there has not been a PAP for debt.

The first PAP for debt work comes into effect from the 1st October 2017. From that point on, the courts will expect you to have followed the protocol in any "business" dispute over a debt.

The qualification above is due to the fact that not all business disputes are covered.


The debt PAP applies to the following disputes only:

• Business to consumer

• Business to Sole Trader

It does not apply to business to business debt (other than above), nor does it apply to consumer to business disputes. It is easy to see that the intention here, in addition to introducing a formalisation of the pre-litigation process, with a view to reducing the pressure on the courts, is to retain an equality of arms between the parties.

Letter Before Action

There are several elements which must be included in your Letter of Claim to the debtor before proceedings are started. The Letter of Claim should contain the date and your return address, together with the following information:

a. The amount of the debt;

b. The amount of interest/charges and whether they are continuing; If not included in the letter, an up-to-date statement of account for the debt together with interest and any other charges must be sent separately,

c. Written contract/or other agreement in writing - you must offer to send a copy of any documents in which the terms of the agreement were reached on request;

d. No written contract - you must include a brief account of where, when and with whom any oral agreement was made, what was agreed, and if possible the words spoken. If the debt has been assigned, you should provide details of the original debt and creditor, when it was assigned and to whom;

e. If an offer has already been made by the debtor, why their offer is not acceptable;

f. Details of how the debt can be paid, including options for payment;

Letter Before Action - Enclosures

With the letter before action, you MUST send the following:

a) Information Sheet

b) Reply Form

c) Financial Statement form

These are provided as specimens at the end of the protocol. I have included them as separate documents to be downloaded above. The Complete Response Pack, as one document, can be downloaded here.

Service of Letter Before Action

The Letter of Claim MUST be sent by post, but can also be sent by email or fax if you have other contact details. It MUST however be sent by post.

No Reply

The debtor has 30 days to reply. If the debtor does not reply to the Letter of Claim within 30 days of the date of the letter, the creditor may start court proceedings, although, NOTE WORDING - "If debtor doesn't reply", NOT "if a reply is not received". It's therefore advisable to wait until a few days after the 30 day period expires, in case the debtor's reply is posted late.

Reply from Debtor

The debtor is required by the PAP to:

a. Use the Reply Form for their response;

b. Request copies of any documents they wish to see;

c. Enclose copies of any documents they consider relevant;

If the debtor replies, the creditor should not start court proceedings less than 30 days from receipt of the completed Reply Form, or 30 days from the creditor providing any documents requested by the debtor, whichever is the later.

The creditor should be prepared to allow the debtor more time if there is evidence that the debtor is actively engaged in the PAP process, or seeking debt advice, or seeking time to pay.

If the creditor does not agree to a debtor's proposal for repayment of the debt, they should give the debtor reasons in writing.

A partially completed Reply Form should be taken by the creditor as an attempt by the debtor to engage. The creditor should attempt to contact the debtor to discuss the Reply Form and obtain any further information needed to understand the debtor's position.

Early disclosure of documents and information is encouraged, and the protocol requires the parties to provide full disclosure, sufficient to enable them to understand each other's position. Any documents requested should be provided within 30 days of request.


Unfortunately, the completed Protocol provides no option for a reply not using the Reply Form. The answer to this anomaly, I believe, can be found in the court's approach to compliance with other Pre Action Protocols, and that approach requires compliance with "the spirit" of the protocol. S2 of the PAP covers the aims of the protocol, which are to encourage engagement and promote early settlement, thereby avoiding litigation. Therefore if the defendant replies by means other than the Reply Form, the court will probably expect the creditor to give them the benefit of the doubt, and continue trying to service the aims of the protocol.

If the parties cannot reach agreement, they are required to consider Alternative Dispute Resolution (ADR - Mediation), although this is no more than a mirror of the compulsory requirement encompassed in the Allocation of cases to the Small Claims Track.


If a matter proceeds to litigation, the court will expect the parties to have complied with this Protocol. The court will take into account non-compliance when giving directions for the management of proceedings. The court will consider whether all parties have complied in substance with the terms of the Protocol, although it is unlikely to be concerned with minor or technical infringements, especially when the matter is urgent.

For further information about the court's approach to compliance, see the Practice Direction - Pre-Action Conduct and Protocols (paragraphs 13 to 16).

Since the 2013 changes to Court procedure, encompassed in the Legal Aid, Sentencing and Punishment of Offenders Act (2012), the Courts have been much more harsh on, and much less tolerant of, non-compliance with the rules. This extension of the Pre-Action Protocol regime to debt claims, means that, where you may not before have been penalised for failing to follow accepted procedure (albeit informal), you will now.

It is therefore crucial that, in the event of a dispute, you ensure that you follow the Protocol as closely as you follow Court Orders and the rules themselves, as if you fail to do so, even if you win your case, your victory could be soured by costs or other penalties being imposed on you.

It is difficult for busy small businesses not to view this as just one more minefield they must navigate. You do not however need to do it alone. For more information on how I can help you, please click the link below.


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