On 1 October 2017 the ‘Pre Action Protocol for Debt Claims’ came into force.
As this protocol applies to any business seeking to recover debt from an individual it should be taken very seriously by letting agents.
In the protocol’s own terms it: “Describes the conduct the court will normally expect of those parties (creditor and debtor) prior to the start of proceedings.”
The aims of the protocol are to:
- Encourage early engagement and communication between the parties, including early exchange of sufficient information about the matter to help clarify whether there are any issues in dispute;
- Enable the parties to resolve the matter without the need to start court proceedings, including agreeing a reasonable repayment plan or considering using an Alternative Dispute Resolution (ADR) procedure;
- Encourage the parties to act in a reasonable and proportionate manner in all dealings with one another (for example, avoiding running up costs which do not bear a reasonable relationship to the sums in issue);
- Support the efficient management of proceedings that cannot be avoided.
But what does this mean in reality?
In short it seeks to improve consistency in relation to creditors’ attempts to recover debts from individuals, and thereby minimise the need to resort to court action.
It also introduces certain template letters and requires creditors to provide the debtor would 30 days to respond to a claim before they initiate court proceedings to recover a debt.
The objective is to improve clarity and consistency whilst avoiding court if possible, encouraging those unable to resolve issues to consider alternative dispute resolution.
However, the question for most letting agents will no-doubt be how much time will it add to the debt recovery process and what will that ultimately cost?