Q&As

Where a borrower has defaulted on a loan and we intend to send a letter before action prior to issuing proceedings in circumstances where the claimant is a company, does the Pre-Action Protocol for Debt Claims apply?

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Published on LexisPSL on 24/04/2018

The following Dispute Resolution Q&A provides comprehensive and up to date legal information covering:

  • Where a borrower has defaulted on a loan and we intend to send a letter before action prior to issuing proceedings in circumstances where the claimant is a company, does the Pre-Action Protocol for Debt Claims apply?
  • When does the Pre-Action Protocol for Debt Claims apply
  • Starting a claim—debt claims governed by the Protocol
  • Claim form and particulars of claim
  • Further reading

Where a borrower has defaulted on a loan and we intend to send a letter before action prior to issuing proceedings in circumstances where the claimant is a company, does the Pre-Action Protocol for Debt Claims apply?

When does the Pre-Action Protocol for Debt Claims apply

As of 1 October 2017, the Pre-Action Protocol for Debt Claims (the Protocol) applies to claims by businesses against individuals (including sole traders) for the payment of a debt. As such, the Protocol would apply in the circumstances you described, assuming that the claimant company is seeking to recover payment of a debt from an individual.

Note that the Protocol only concerns claims for the payment of a debt, and it does not apply to business-to-business debts, unless the debtor is a sole trader. Prior to 1 October 2017, such claims were governed by the Practice Direction Pre-Action Conduct and Protocols (the Practice Direction). Debt claims which fall outside the ambit of the Protocol will continue to be governed by the Practice Direction. For more information on the Practice Direction Pre-Action Conduct and Protocols, see Practice Note: Pre-action behaviour in non-protocol cases—Practice Direction Pre-Action Conduct and Protocols.

For completeness, see also Practice Note: The pre-action protocols and when they apply which includes information on the other specific Pre-Action Protocols and note that the Protocol will not apply where a debt is covered by

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