1 INTRODUCTION 1.1 This Protocol applies to any business (including sole traders and public bodies) claiming payment of a debt from an individual (including a sole trader). The business will be referred to as the “creditor” and the individual will be referred to as the “debtor”. This Protocol does not apply to business-tobusiness debts unless the debtor is a sole trader. 1.2 The Protocol describes the conduct the court will normally expect of those parties prior to the start of proceedings. It includes a template Information Sheet and Reply Form to be provided to debtors in all cases. 1.3 The Protocol is intended to complement any regulatory regime to which the creditor is subject. To the extent that compliance with this Protocol is inconsistent with a specific regulatory obligation (such as a principle, rule or Civil Procedure Rule Committee Pre-Action Protocol for Debt Claims Consultation 2 November 2015 – 11 January 2016 – 2 – guidance contained in the Financial Conduct Authority’s Handbook) that regulatory obligation will take precedence. The Protocol should also be read in conjunction with industry and government guidance relating to good practice in the recovery of debt. 1.4 The Protocol does not apply where the debt is covered by another Pre-Action Protocol such as Construction and Engineering or Mortgage Arrears. 2 AIMS OF THE PROTOCOL 2.1 This Protocol’s aims are to – (a) enable the parties to resolve the matter without the need to start court proceedings, including considering using an Alternative Dispute Resolution (ADR) procedure or agreeing a reasonable repayment plan; (b) encourage early exchange of sufficient information about the matter to help clarify the issues in dispute; (c) encourage the parties to act in a reasonable and proportionate manner in all dealings with one another (which includes only incurring costs which bear a reasonable relationship to the sums in issue); (d) support the efficient management of proceedings that cannot be avoided. 3 INITIAL INFORMATION TO BE PROVIDED BY THE CREDITOR 3.1 The creditor should send a Letter of Claim to the debtor before proceedings are started. The Letter of Claim should – (a) contain the following information – (i) the amount of the debt; (ii) whether interest is continuing; (iii) where the debt arises from an oral agreement, who made the agreement, what was agreed (including, as far as possible, what words were used) and when and where it was agreed; Civil Procedure Rule Committee Pre-Action Protocol for Debt Claims Consultation 2 November 2015 – 11 January 2016 – 3 – (iv) where the debt has been assigned, the details of the original debt and creditor, when it was assigned and to whom; (v) if regular instalments are currently being offered by or on behalf of the debtor, or are being paid, an explanation of why a court claim is being considered; (vi) details of how the debt can be paid (for example, the method of and address for payment) and details of how to proceed if the debtor wishes to discuss payment options; (vii) the address to which the completed Reply Form should be sent; (b) do one of the following – (i) enclose an up-to-date statement of account for the debt; (ii) enclose the most recent statement of account for the debt and state in the Letter of Claim the amount of interest incurred and any administrative or other charges imposed since that statement of account was issued, sufficient to bring it up to date; or (iii) where no statements have been provided for the debt, state in the Letter of Claim the amount of interest incurred and any administrative or other charges imposed since the debt was incurred; (c) where the debt arises out of a written agreement, enclose a copy of that agreement, unless providing the agreement is disproportionately burdensome to the creditor; (d) enclose a copy of the Information Sheet and the Reply Form at Annex 1 to this Protocol; and (e) enclose a Statement of Means form (an example Statement of Means is provided in Annex 2 to this protocol). 3.2 The Letter of Claim should be clearly dated toward the top of the first page. It should be posted either on the day it is dated or, if that is not reasonably possible, the following day. Civil Procedure Rule Committee Pre-Action Protocol for Debt Claims Consultation 2 November 2015 – 11 January 2016 – 4 – 3.3 The Letter of Claim should be sent by post. If the creditor has additional contact details for the debtor, such as an email address, the creditor may also send the Letter of Claim using those details. If the debtor has made an explicit request that correspondence should not be sent by post, and has provided alternative contact details, the creditor should use those details when sending the Letter of Claim. (Note that a condition in a creditor’s standard terms does not constitute an explicit request.) 3.4 If the debtor does not reply to the Letter of Claim within 30 days the creditor may start court proceedings, subject to any remaining obligations the creditor may have to the debtor (for example, under the Financial Conduct Authority’s Handbook). Account should be taken of the possibility that a reply was posted towards the end of the 30-day period. 4 RESPONSE BY THE DEBTOR 4.1 The debtor should use the Reply Form in Annex 1 for their response. The debtor should request copies of any documents they wish to see and enclose copies of any documents they consider relevant, such as details of payments made but not taken into account in the creditor’s Letter of Claim. 4.2 If the debtor indicates that they are seeking debt advice, the creditor must allow the debtor a reasonable period for the advice to be obtained. In any event, 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. 4.3 If the debtor indicates in the Reply Form that they are seeking debt advice that cannot be obtained within 30 days of their reply, the debtor must provide details to the creditor as specified in the Reply Form, and the creditor must allow reasonable extra time for the debtor to obtain that advice. 4.4 Where a debtor indicates in the Reply Form that they require time to pay, the creditor and debtor should try to reach agreement for the debt to be paid by instalments, based on the debtor’s income and expenditure. In trying to agree affordable sums for repayment, the creditor should have regard where appropriate to the provisions of the [Common] / [Standard] Financial Statement or equivalent guidance. If the creditor does not agree to a debtor’s Civil Procedure Rule Committee Pre-Action Protocol for Debt Claims Consultation 2 November 2015 – 11 January 2016 – 5 – proposal for repayment of the debt, they should give the debtor reasons in writing. 5 DISCLOSURE OF DOCUMENTS 5.1 Early disclosure of documents and relevant information can help to clarify or resolve the issues in dispute. On that basis, where any aspect of the debt is disputed (including the amount, interest, charges, time for payment, or the creditor’s compliance with relevant statutes and regulations), the parties should exchange information and disclose documents sufficient to enable them to understand each other’s position. 5.2 If the debtor requests a document or information, the creditor must – (a) provide the document or information; or (b) explain why the document or information is unavailable, within 30 days. 6 TAKING STEPS TO SETTLE THE DISPUTE AND ALTERNATIVE DISPUTE RESOLUTION 6.1 If the parties still cannot agree about the existence, enforceability, amount or any other aspect of the debt, they should both take appropriate steps to resolve the dispute without starting court proceedings and, in particular, should consider the use of an appropriate form of Alternative Dispute Resolution (ADR). 6.2 ADR may simply take the form of discussion and negotiation, or it may involve some more formal process such as a complaint to the Financial Ombudsman Service where the dispute concerns a debt regulated under the Consumer Credit Act 1974. 6.3 In some cases, especially where the debt is large, mediation (a third party facilitating a resolution) might be appropriate. Details of registered mediation providers can be obtained from the Civil Mediation Provider Directory at www.civilmediation.justice.gov.uk. The potential costs of mediation should be considered in relation to the amount of the debt. Civil Procedure Rule Committee Pre-Action Protocol for Debt Claims Consultation 2 November 2015 – 11 January 2016 – 6 – 6.5 Where the parties reach agreement concerning the repayment of the debt, the creditor should not start court proceedings while the debtor complies with the agreement. 7 COMPLIANCE WITH THIS PROTOCOL 7.1 If a dispute 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 and is not likely to be concerned with minor or technical infringements, especially when the matter is urgent (for example an application for an injunction). 7.2 For further information about the court’s approach to compliance, see Practice Direction – Pre-Action Conduct and Protocols (paragraphs 13 to 16). 8 TAKING STOCK 8.1 Where the procedure set out in this Protocol has not resolved the dispute between the debtor and creditor, they should undertake a review of their respective positions to see if proceedings can be avoided and, at the least, to narrow the issues between them. 8.2 Where the debtor has responded to the Letter of Claim but agreement has not been reached, the creditor should give the debtor at least 14 days’ notice of their intention to start court proceedings, unless there are exceptional circumstances in which urgent action is required. Civil Procedure Rule Committee Pre-Action Protocol for Debt Claims Consultation 2 November 2015 – 11 January 2016 – 7 – ANNEX 1 INFORMATION SHEET You have received this notice because a business intends to take you to court in relation to a debt. This notice tells you about your rights and what to do next. Please read it carefully. Why have I received this notice? You have received this notice because a business believes you owe it money. The business intends to take you to court to make sure the money is paid. Before the business can take you to court, it must send you a letter along with this notice. What should the letter from the business say? The letter from the business should give you the following information: The amount of money the business thinks you owe. Information about interest and fees added to the debt. This might be shown in an updated account statement. Details of how to pay the debt and how to discuss payment options. The letter from the business might give you the following extra information, depending on whether it is relevant to you: If you have offered to make payments, an explanation of why the business still wants to take you to court. If the debt has been passed from one business to another, details of your original debt and details of the debt’s transfer to the new business. If your agreement to pay the debt was not written down, information about your spoken or “oral” agreement. The letter should also enclose a copy of a Reply Form for you to fill out. Finally, the business might have sent you a copy of your written contract that sets out your agreement to pay the debt. You should check that the letter from the business contains all the relevant information.