In the course of business there are many times where goods change hands but the money is a little slower to arrive. Rather than risk damaging new or long standing business relationships, the parties give each other a little time to get their affairs in order and allow the money to come in.

But what happens if days, weeks or even months pass but the money has still not arrived. There are steps that parties can take to recover their money via debt proceedings.

Although this may seem a difficult step to take, it does not have to be confrontation as imagined. Under the Pre-Action Protocol for Debt Collection (“the Protocol”) the parties are encouraged to negotiate and come to an amicable agreement and avoid litigation. Although a Creditor may not need to completely comply with the Protocol, is it good practice to do so. A Creditor would therefore run the risk of being liable for costs and other sanctions.

Should negotiations fail then the next step is to send a ‘Letter of Claim’ which complies with the Protocol. A Letter of Claim should include: the debt amount, interest being charged, how the debt has arisen, any written agreement, how the debt can be re-paid and a Rely Sheet.

The Debtor will then have 30 days from the date of the Letter of Claim to respond after which the Creditor is free to issue proceedings unless:

  • The Debtor asks for time to pay or confirm that he or she is seeking debt advice.
  • The Debtor returns the Rely Sheet (even if partially completed) as this will show the Creditor that he is willing to engage.
  • The Debtor responds and should be given 14 days notice from the Creditor to issue proceedings or;
  • The Debtor and Creditor reach an agreement – in which case the Creditor should not issue proceedings.

Failing the above the Creditor is then free to issue proceedings and can do so without notice.

When issuing proceedings the Creditor will need to provide the Claim Form and Particulars of Claim.

A Debtor will also have a number of options available to him as well once proceedings are issued:

  • Accept all or part of the claim. If this is the case the Debtor should make payment of the part of the Debt which is accepted.
  • Dispute the whole of the claim – the Debtor should in this instance set out all the reasons why.
  • Raise a counterclaim – the Debtor should set out all the details of any counterclaim which the Creditor should respond to.
  • Any agreement to resolve the dispute.

When responding to the Letter of Claim the Debtor should use the Reply Form if is it a simple matter as the form does not cater for complex matters. In the event of complex matters the Debtor should provide a full Letter of Response.

 

We have experience in dealing with debt matter, should you require any further advise in relation to any of the issues raised in this article please contact Susan Lewis on 01924 387110.


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