…At least when it comes to recovering money owed by individuals and sole traders following the introduction of a new set of rules introduced this month to ‘speed up’ up the debt recovery process.
For anyone who isn’t aware, the new Pre-Action Protocol for Debt Claims came into force this month (1 October). The new rules are designed to reduce the number of claims reaching the courts and encourage early resolutions between parties.
On the one hand this may reduce the burden on the courts, however it may also have the effect of making it harder for businesses to claim money from individual debtors. While the Direction for Pre-Action Conduct and Protocols (PDPAC) continue to apply for business to business cases, the new rule requires businesses to demonstrate compliance before they can proceed to any court proceedings.
Debtors will now have more time following the introduction of a minimum 30-day period between the date a letter is sent and the issuing of proceedings. These letters will need to contain a detailed response form the debtor must fill in which is why more time is being given to complete the required paperwork.
Any delays in recovering bad debts can put businesses at more risk of having cashflow problems rather than helping their situation.