New protocol for money claims by businesses against individuals

Businesses with debts outstanding from individuals or sole traders need to be aware of new regulations which came into effect on 1st October 2017.

The new Pre-Action Protocol for Debt Claims (Protocol) applies to any business (including sole traders and public bodies) claiming payment of a debt from an individual (including a sole trader).

The Protocol has a number of aims which include encouraging parties to resolve matters outside of court proceedings.

The business must send a letter of claim to the debtor before commencing court proceedings which should contain comprehensive details of the debt and allow the debtor to make payment by way of a ‘reasonable repayment plan’. The debtor is given a minimum of 30 days to respond to the letter of claim before the business is able to commence proceedings.

The Protocol only applies where the claim is by a business against an individual and will not apply where the claim is:

1. Between two businesses
2. Between two individuals
3. By an individual against a business

For further information please contact Sarah Mower in our Business Services department. Please remember that it is important to take specific legal advice in relation to your own precise circumstances.

Rebecca McCarthy is a trainee solicitor at Barker Gotelee Solicitors.

Solicitors in Suffolk – for more information on our range of legal services, please call the team on 01473 611211 or email [email protected]