The New Pre-Action Protocol introduced on October 1 by the Ministry of Justice has slipped in barely unnoticed but it will almost certainly make debt recovery harder when dealing with individual debtors.
If you are in the midst of considering a claim against an individual or even a sole trader, the claim will now need to be set out in much greater deal than ever before including how the reasons why the person owes money and how it has been calculated.
The new rules now apply to any business including public bodies but not to business to business debts which are treated differently.
While the new rules have been aimed at adding clarity to disputes and putting the onus on those involved to provide all the necessary details before pursuing debts, the downside is the odds are now stacked more in favour of debtors than creditors in cases where the correct information hasn’t been provided.
Debtors can delay collection for as 90 days and creditors will be forced to be far more vigilant in ensuring deadlines are met in the exchange of information. Also if the creditor fails to comply with the protocol some of the worst consequences include having to pay the alleged debtor’s legal expenses.