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By Pete Gardner, Associate and Defended Commercials Recovery Manager at Spratt Endicott Solicitors

Pete Gardner

Pete Gardner

he introduction of the Pre-Action Protocol for Debt Claims (“PAP”) is set to affect many businesses across a wide range of industries, including those working in the banking and finance sectors.

The PAP is part of the Civil Procedure Rules, which govern how parties deal with litigation claims through the County Court, and this is the first time that pre-action on a debt has been specifically covered within them.

Does it affect me?

Understandably, this is the first question most businesses would ask. The answer is that if you’re a business that ever has to chase any of your customers for payments, then there’s a very good chance that PAP will directly affect you.

The PAP sets out specific rules you must follow if you intend on taking any of your customers to court for non-payment of debt. However, it’s not all-encompassing. It doesn’t apply if you’re chasing a limited company or partnership, meaning if that’s the case then you can safely ignore the stipulations set out by the PAP.

You can also ignore this particular PAP if the type of debt you are pursuing already comes under another protocol, such as the Pre-Action Protocol for Construction and Engineering.

Where the Pre-Action Protocol for Debt Claims really comes into force is if you’re chasing an individual or a sole trader that you intend to sue. In these circumstances, you must now ensure that you comply with the requirements set out within it.

How do I comply? 

The first thing is to send a ‘Letter before Claim’ to your customer. This should include basic information such as the amount of debt owed and your address, as well as details of the agreement (oral or written) that you are chasing them in relation to. Also, if relevant, you should include why you are refusing to accept any instalment plan they may have offered you.

A statement of account should be included with the letter, or an explanation as to how you have calculated any additional interest or charges that have been added to the initial debt.

In addition, three other documents must be attached to the letters; these are an Information Sheet, Reply Form and Financial Statement.

What happens next? 

Once the letter and attachments have been sent, the customer must be given 30 days in which to respond. Following that period, if there’s no response, then you’re in a position where you can sue them for the debt.

If they do respond, however, then various time restraints come into play:

  • They ask for information and copy documents. In this scenario, you must respond to the request within 30 days, and then wait another 30 days before you can sue.
  • They are seeking debt advice. You must wait a further 30 days for them to take this advice and respond to you with the outcome.
  • They ask for time to pay. In this instance, you must try to come to an agreement that’s reasonable based on their income and expenditure. If an agreement can’t be reached, you must write to inform them of this and give 14 days notice of your intention to sue. If an agreement is made and the customer subsequently defaults on the payment, then the PAP process must be started from scratch.
  • They provide a partially completed Reply Form. If this happens, you should contact them for more information so that you can fully understand their position.
  • They dispute the debt. You should exchange information and documents with them to try to resolve the dispute. If this can’t be resolved, you should explore the possibility of alternative dispute resolution such as mediation.

What if I ignore the PAP?

With the PAP being newly implemented, at this stage we’re not in a position to know how tough a line the court will take with non-compliance. However,I would strongly advise against testing the court on this. If your claim does proceed to litigation, the court will expect you to have complied with the PAP. If you haven’t complied with it, there’s a chance the court could sanction you by staying the claim until you do so and could punish you heavily in terms of costs by ordering you to pay both sides’ costs of the proceedings, regardless of the outcome of the claim.

Moving Forward

The PAP should be no reason for panic. Legal advisors, including myself and the team here at Spratt Endicott, have been keeping firmly abreast of the PAP’s developments, so are well positioned to give appropriate guidance. We, and others in the industry, can help you to prepare Letters before Claim and ensure you properly comply.

If you are pursuing debts from individuals or sole traders, given the potentially costly implications, it’s advisable to comply rather than face any financial repercussions further down the line.

Peter Gardner is an Associate and Defended Commercial Recoveries Manager at Spratt Endicott Solicitors, a leading Oxfordshire and Legal 500 ranked Law Firm that provides a full range of legal services to both commercial and private clients. For more information regarding its full range of services, please visit

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