In debt, indebted, or just want to know how to get your money?


A new Pre-Action Action Protocol for Debt Claims (the Debt Protocol) came into force on 1st October 2017.

Subject to certain exceptions, the 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 does not apply though to business-to-business debts, unless the debtor is a sole trader.

For those chasing customers, clients and companies who owe substantial amounts of money the process can be time-consuming, sometimes emotive and damaging to cash flow.It is important to balance the impact of bad debts against the potential cost of recovery.Proportionality is an overriding objective under the Civil Procedure Rules.Achieving proportionality is an important principle under the Civil Procedure Rules.​

Chasing debts using formal methods of debt recovery has become more prescriptive and the Protocol is evidence of that. A court may impose sanctions on any party that fails to comply with the relevant pre-action procedure though – so it is necessary to follow it.

The aim of the Debt Protocol is to promote early communication between the parties, including early exchange of information about the debt, to enable the parties to resolve the dispute in a cost-effective way and is supposed to encourage the parties to act reasonably and proportionately to support the efficient management of proceedings that cannot be avoided.

If you are someone who has tried the ‘softly-softly’ approach but now needs to up the ante by triggering the steps under the Debt Protocol, this approach could persuade the other side to pay up, either immediately, or shortly afterwards, otherwise they risk the matter going to a trial and enforcement action being taken against them if they do not pay. 


​What constitutes a ‘debt’ for the purposes of the Protocol is not absolutely certain because the Protocol does not contain a definition. What is clear though is that s35A of the Senior Courts Act 1981 states that a debt ‘includes a sum of money subject to an obligation to repay’, irrespective of how the obligation arises, whether under a contract or not.

Although not a substitute for a statutory demand, a written demand for payment served on any individual or a company, is designed to be a precursor to commencement of bankruptcy proceedings against the debtor, so the procedural steps under the Protocol are better equipped for obtaining your money from a solvent person.

The procedural steps include but are not limited to sending a Letter of Claim containing information about the debt, whether interest or other charges are accruing,setting out whether the debt arises from an oral or written agreement (by giving information about the agreement if one exists) and requires disclosure of certain documents – including in some cases an up to date statement of account, or when no statement of account has been provided, a statement explaining the amount of interest incurred and other administrative or other charges imposed since the debt was incurred.

A response from the debtor is usually to be expected within 30 days of the date of the Letter of Claim and the debtor should complete and return a Reply Form.

A request for copies of documents which the debtor wishes to see should also be disclosed.

A reasonable period of time should be granted for a debtor to take legal advice.A creditor should in such circumstances not commence court proceedings until the expiration of 30 days from receipt of the completed Reply Form from the debtor or, if later, 30 days from the date on which the creditor provides any documents requested by the debtor.

In some cases, it may be appropriate to afford “reasonable extra time” for a debtor to obtain advice where it would be reasonable to do so in the circumstances.

The consequences of not responding to a letter of claim within 30 days of the date specified opens the gates to a creditor commencing court proceedings if they wish to.

There are also alternative dispute resolution steps which can also be taken in order to encourage parties to take appropriate steps to resolve the dispute without recourse to commencing formal court proceedings. 


If you would like to know more about chasing an outstanding debt or the requirements of the Debt Protocol, or more generally for a creditor or debtor, Pinney Talfourd can assist. We have an experienced and dedicated team of specialist commercial litigation solicitors based in our offices across Essex and London.

We have late night and Saturday appointments available in our offices in BrentwoodHornchurchUpminsterLeigh-On-Sea and Canary Wharf for those that find it difficult to make appointments during working hours. We are also happy to meet with you onsite at your own premises if more convenient.


The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.


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