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Pre-action protocol

If your business wants to recover debt that is owed to you by another company or an individual, you will need to follow the correct pre-action protocol for your specific circumstances, in order to meet the requirements if you later wish to take further legal action.

For businesses attempting to recover what they are owed from another business (excluding sole traders), the appropriate pre-action protocol for debt claims is to send a Letter Before Action.

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Pre-action protocol - letter of claim

For businesses that are pursuing what they are owed from an individual, including sole traders, the correct pre-action protocol debt recovery first step is to send a letter of claim. This protocol came into force in October 2017 and must now be used for this type of debt recovery.

If your business fails to follow the correct debt pre-action protocol at this stage, you may not be able to later pursue the debt through the courts, if this is required.

If your business is trying to recover money that is owed to you, please contact our expert debt recovery team on 0161 696 6170 to find out how we can help.

How long does following the pre-action debt protocol take?

The process of issuing a letter before action, or a letter of claim (depending on whether the debtor is a business or an individual) can be carried out once repayment is late. Most businesses will send a late payment demand at this point, requesting that the full amount owed is repaid within a set number of days.

If any late payment demands are not met, the debt recovery pre-action protocol of the letter before action or letter of claim will then usually be sent. There are specific requirements for what each of these letters must contain, and there will also be a set period of time outlined for the debtor to repay what they owe. For a letter before action, this a ‘reasonable amount of time’, which is usually 14 days. For a letter of claim, the period of time given is 30 days.

For the vast majority of debt recovery cases, following the respective pre-action protocol for debt claims is all that is needed for a successful outcome and the debt to be repaid. In the minority of cases, when pre-action protocol letters for debt are not successful in prompting the repayment in full, litigation may be required to recover the debt.

Find out more about sending a letter before action to a business here.

Find out more about sending a letter of claim to an individual here.

At Stephensons, our experienced team have a proven track record with both types of pre-action debt recovery protocol, so we can offer tailored advice for your business and work on your behalf for the best possible outcome. Get in touch to find out more; call us on 0161 696 6170.

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