This MoneyNerd guide is all about the debt recovery & debt assignment protocol. 

We’ll walk you through the pre-action debt protocol so you know how to respond to letters sent by your creditors trying to recover money from you.

What is the Pre-Action Debt Protocol?

The pre-action debt protocol is a set of standards and expected behaviours for companies trying to recover debt from individuals. These behaviours must be abided by for court action to remain a realistic option. The reason we have a pre-action debt protocol is to protect debtors, avoid unnecessary delays – and even to try and avoid court action.

The pre-action debt protocol applies to everyone involved. Whether you are trying to recover costs or someone wants you to pay debts, this debt protocol matters to everyone. 

Pre-Action Debt Protocol – Before Legal Action

The pre-action debt protocol includes guidance and rules before deciding on court intervention. Behaviours and communications between all parties should be open, honest and with the intention of avoiding legal proceedings. 

Many of the rules apply to the letter of claim sent at the beginning of the process.

The Letter of Claim

The party trying to recover money must send a letter that asks for payment before trying to take the debtor to court. It is not allowed to take court action without trying to find a mutual solution first.

The letter should provide key information about the debt, including but not limited to:

  • The debt’s history in case it has been sold on
  • The amount owed and interest accrued
  • Singed proof of the debt if applicable
  • Options to repay the debt
  • Contact details of the company chasing payment 

The letter should also include three important attachments: 

  • An information sheet with your debtor rights
  • A reply form 
  • A statement of means form

Replying to the Letter of Claim

The letter of claim comes with a reply form. You must fill in this form and send it back to the creditor within 30 days of receiving the initial letter. We recommend getting support from a debt charity before replying.

There are four sections to complete:

Section One

Here you can declare that you don’t owe the debt, only owe some of it, or owe all of it. 

Section Two

If you acknowledge you owe some of the money, you can provide details of your finances and how you wish to repay the debt (possibly over many months). You need to use the statement of means form here. 

Section Three

Provide information that you plan on getting debt advice here. If it will take longer than 30 days to get debt advice, you must give a good reason for this. 

Section Four

Section four is to ask for more proof of the debt. If the collection group hasn’t provided enough information or proof that you owe the debt, meaning you can’t say if you do or do not owe it, you can request it in this section. 

If you can’t fill in all sections don’t worry. Just make sure you send what you can complete within 30 days. The creditor cannot start court action without contacting you for more information about the incomplete form. 

The Alternate Response – Statute Barred

The only time you won’t need to fill in the form is when your debt is Statute Barred. This is when the debt is older than six years and not been paid in part in the previous six years – and never been judged in court before. 

Statute Barred debts don’t need to be paid back because they cannot go to court. The courts are simply too busy to talk about old debts – and they refuse to. 

If you think your debt might be Statute Barred, the legal threat is empty. Speak with a debt charity for advice and a Statute Barred reply letter to send back. 

Top tip: Replying to the letter by saying you owe some of the debt will stop it from being Statute Barred. Don’t reply to the letter without investigating if Statute Barred applies first!

I Requested More Proof, What Now?

If you replied to the letter asking for more evidence that you owe the debt, the onus is now on the creditor to supply proof. 

If they do send you evidence of the debt in your name, they must wait an additional 30 days before starting a court claim. You can avoid this altogether by cooperating further. 

Settle Disputes Before Court

The pre-action debt protocol requests that all parties try and resolve disputes before taking legal action. It encourages best efforts to come to an agreement and both concede ground to prevent court proceedings going ahead. 

You could consider a mediating service in this situation, but you are not forced to use them because these services often come at a cost. 

Any agreement must be honoured and shouldn’t be rescinded to go to court. 

How Much Notice Must the Creditor Provide for Court Action?

If no resolution can be made outside of court and all parties have followed the debt protocol, court action may go ahead. 

If your creditor decides to take you to court, they must give at least 14 days’ notice of their intentions. 

Not Following the Pre-Action Debt Protocol

If the creditor or the debtor do not follow the protocol correctly, the court can make decisions that affect either or both parties. 

It is unlikely but not unheard of, that courts increase the debt owed if the debtor has not followed the pre-action debt protocol closely enough. 

Similarly, and slightly more likely, the judge can reduce the debt if the creditor wins the case but is found to have not followed the pre-action debt protocol well enough. 

Moreover, legal and court costs may be handed to either party found not to have followed the debt protocol accurately. 

You can find more useful information on this subject and others by visiting MoneyNerd. 

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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