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Mon 11 Sep 2017

New Procedure for Debt Claims coming into effect 1 October 2017

New Procedure for Debt Claims coming into effect 1 October 2017
A new protocol due to come in to place on 1 October will impact how a business can pursue debtors for payment in litigation.

There are many reasons why people do not always pay their bills - they may have an issue with service, misunderstand the terms initially laid out or simply not have the money to pay the bill.

Currently, if an individual owes money to a business then that company should, in accordance with the pre action protocol, send a letter before claim setting out what they believe is owed, reasons why it is, what documents they seek to rely upon and the time period for the debtor to respond. If no response is received, the business can then issue a claim without any further notice to that individual to which a failure to respond could increase the risk that they will be on the receiving end of a costs order.

Often a letter before claim can encourage payment where an individual is paying only those who shout the loudest. Alternatively it may prompt a response detailing what the actual issue with payment is, so it can be dealt with.

As it stands currently, when a company has to send out a letter before claim, as a matter of last resort after the credit control procedure has been exhausted, it can have a devastating impact upon the company’s cash flow. However, the process of a company bringing a claim against an individual for non payment of a debt is due to become even more complex due to the new protocol. Read more >

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