On the 6th April 2009, the 49th Update of the Civil Procedure Rules comes into force. Of particular importance to Debt Recovery matters is the new Protocol on Pre-action Conduct which replaces the Practice Direction. Much emphasis has been placed on this subject in recent times as evidenced by the introduction of Mortgage pre-action protocol last November.

Those pursuing debt recovery by litigation can take some comfort in that the procedure is not intended to apply to debt claims where it is not disputed that the money is owed and where the claimant follows a statutory or other formal preaction procedure. However, there is a requirement where the creditor is a business and the debtor is an individual, for the former to provide the debtor with information about sources of advice, before proceedings can be issued.

Paragraph 7 of the Practice Direction deals with exchange of information before the start of proceedings and suggests that:

• the letter of claim is sent.
• the debtor should acknowledge the letter within 14 days and give a full response within a reasonable period of time, which for a straightforward undisputed debt is generally 14 days.
• Annex B to the Practice Directions sets out specific information that should be provided before starting proceedings in a debt claim by a claimant who is a business against a defendant who is an individual.

Annex B makes provision for the information a claimant business should provide to the individual debtor and this is that the claimant should:

(1) provide details of how the money can be paid (for example the method of payment and the address to which it can be sent);

(2) state that the defendant can contact the claimant to discuss possible repayment options, and provide the relevant contact details; and

(3) inform the defendant that free independent advice and assistance can be obtained from organisations including those listed in the table below.

Independent Advice Organisations

National Debtline Tricorn House
51-53 Hagley Road
Edgbaston
Birmingham
B16 8TP
FREEPHONE
0808 808 4000
www.nationaldebtline.co.uk

Consumer Credit Counselling
Service (CCCS)
FREEPHONE
0800 138 1111
www.cccs.co.uk

Citizens Advice Check your local Yellow Pages or Thomson local directory for address and telephone numbers
www.citizensadvice.org.uk

Community Legal 0845 345 4345 www.clsdirect.org.uk

2. The information may be provided at any time between the claimant first intimating the possibility of court proceedings and the claimant's letter before claim.

3. Where the defendant is unable to provide a full response within the time specified in the letter before claim because the defendant intends to seek debt advice then the written acknowledgment should state:

(1) that the defendant is seeking debt advice;
(2) who the defendant is seeking advice from; and
(3) when the defendant expects to have received that advice and be in a position to provide a full response.

4. A claimant should allow a reasonable period of time of up to 14 days for a defendant to obtain debt advice.

5. But the claimant need not allow the defendant time to seek debt advice if the claimant knows that:

(1) the defendant has already received relevant debt advice and the defendant's circumstances have not significantly
changed; or
(2) the defendant has previously asked for time to seek debt advice but has not done so.
Failure to comply with the protocol may lead to costs penalties or the court requiring the party to explain why.

If you require any further information relating to this article, please contact:

Mark Taylor
Business Development Manager
mtaylor@incasso.co.uk
T: 0845 404 1902