1 year ago

June 2017 Credit Management magazine

The CICM magazine for consumer and commercial credit professionals


EDUCATION TIPPING THE BALANCE AGAINST CREDITORS Robert Addlestone believes the new Pre-Action Protocol (PAP) for Debt Claims does not make pleasant reading for creditors. “The new Protocol would seem to tip the balance in favour of debtors and away from creditors. It is easy to see how creditors can and will abuse its well-intentioned terms. THE Master of the Rolls has released the new Pre-Action Protocol for Debt Claims which comes into force on 1 October 2017. The Protocol does not apply to business-to-business debts unless the debtor is a sole trader. Letter of Claim The Letter of Claim should contain the following: • The amount of the debt and whether interest or other charges are continuing • Where the debt arises from an oral agreement, details of who made the agreement, what was agreed (including as far as possible what words were used) and where and when it was agreed • Where the debt arises from a written agreement, the date of the agreement, the parties to it and the fact that a copy of the written agreement can be requested from the creditor • If regular instalments are currently being offered by the debtor, an explanation of why the offer is not acceptable. It must enclose: • An up-to-date statement of account for the debt including details of any interest and administration of charges • A standard Information Sheet and Reply Form. Time Limits The letter of claim must give 30 days for a response before court proceedings are started. The Protocol states: ‘Account should be taken of the possibility that a reply was posted towards the end of the 30-day period’. How that will work in practice is unclear but it may mean that, in effect, 33 days must be given. If a debtor indicates they are seeking debt advice the creditor must allow the debtor ‘a reasonable period for advice to be obtained’ and 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, whichever is the later. In practice this means that if the debtor states they are seeking debt advice, 60 days (or 63 days) should be given before proceedings are issued. If a debtor wishes to seek advice but cannot do so within 30 days he must provide details as to why the advice cannot be obtained within 30 days and the creditor should then allow ‘reasonable extra time’. Where the debtor has responded to a Letter of Claim but agreement has not been reached then the creditor should give at least 14 days’ notice before issuing any court proceedings. Encouragement of ADR The Protocol encourages Alternative Dispute Resolution (ADR) and there is a specific provision setting out that the parties should undertake a review of ‘their respective positions’ to see if ‘proceedings can be avoid’. Failure to Comply The Protocol sets out that the court will take into account non-compliance when giving directions for the management of proceedings, although it 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. In practice this may mean that proceedings are stayed until the Protocol is complied with. Conclusion The new Protocol would seem to tip the balance in favour of debtors and away from creditors. It is easy to see how debtors can, and will, abuse its well-intentioned terms. Full details of the Protocol and its implementation will form part of the CICM’s legal training suite (see opposite page). Robert Addlestone is Litigation Partner at CW Harwood & Co Solicitors and a CICM trainer. 44 June 2017 The Recognised Standard

LEGAL TRAINING Are you up-to-date with significant changes? The Ministry of Justice has announced that The Pre-Action Protocol for Debt Claims has been made by the Master of the Rolls as Head of Civil Justice. The Protocol comes into force on 1 October 2017. Join a CICM training day to refresh your legal knowledge Learn from CICM legal experts – a range of legal recovery programmes available. All have been updated to incorporate the very significant changes. The CICM Insolvency programme includes changes to the Insolvency Rules that came into effect in April 2017. CICM Open training (Legal): Debt recovery through the courts: 15 June, 7 September and 6 December Advanced debt recovery through the courts: 6 July, and 11 October Insolvency & Bankruptcy: 17 July Handling your own small claims: 4 August and 11 October CICM members: £390 +vat. Non-members: £310 + VAT To book your place contact 01780 722907 In-company training If you have a number of people to train we can deliver a tailored training programme at your offices at a time convenient for you. For further details contact or telephone: 01780 722907 The Recognised Standard June 2017 45

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