Debt Claims PAP – we want your views

On 1 September 2014, the Civil Procedure Rules Committee (CPRC) commenced its one-month consultation on the  draft pre-action protocol for debt claims (the Debt PAP).

One of the reasons why a consultation was considered necessary in this case (there’s no consultation ‘obligation’) was the CPRC’s receipt of unsolicited comments, primarily from creditors, on an earlier version of the Debt PAP circulated in April this year.

If you’ve read the Debt PAP you’ll understand why some creditors are concerned about its content as its core principle is that debtors, or alleged debtors, should be provided with sufficient information to enable them to obtain advice on their position prior to the issue of a claim, and this principle is underpinned by debtor-friendly provisions and the front-loading of obligations on the creditor in an attempt to encourage the early settlement of debt claims.

What are the key features?

the Debt PAP applies to any business (including a sole trader) claiming payment of a debt from an individual (including a sole trader). It is expressed not apply to business to business debts unless both parties are sole traders (para 1.1)

it stipulates what information the claimant should provide to the defendant in the letter of claim (which must include notice in the form set out in the PAP itself) and what documentation should be enclosed (paras 3.1-3.3). It is likely that creditors, particularly volume creditors, will consider that these obligations are too onerous

a debtor-defendant is required to use a standard form of reply, as set out in Annex 1 to the Debt PAP, for the purposes of responding to the creditor’s letter of claim (para 4.1)

the claimant-creditor is required to allow the defendant ‘sufficient time’ to seek legal advice and, in any event, 28 days (para 4.3)

the Debt PAP makes provision for the disclosure of documentation where any aspect of the debt is disputed (other than terms of any payment arrangement) (para 5)

there are stipulations regarding the use of ADR (para 6)

it provides guidance on how the court will approach non-compliance with the Debt Protocol (para 7)

it includes an obligation on the parties to ‘take stock’ if they have been unable to settle the dispute before the claimant commences proceedings, including an obligation on the claimant to give the defendant 14 days’ notice of an intention to commence proceedings (para 8)

 

Participating in the consultation

Those wishing to participate in the consultation should note the following:

written responses are to be provided on the content of the Debt Protocol, rather than the underlying principle

the deadline for all responses is 5:00 pm on Tuesday 30 September 2014

written responses should be sent by post to Mrs Jane Wright, Post Point 4.32, Ministry of Justice, 102 Petty France London SW1H 9AJ or by email (subject: PAP Debt Claims Consultation)

representative groups are asked to give a summary of the people and organisations they represent when they respond

in relation to the confidentiality of any response, see the document attached to the CPRC’s letter setting out their position

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