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Pre-action Protocol for Debt Claims

This content applies to England & Wales

The pre-action protocol covering the procedure where a creditor is claiming payment of a debt.

It is uncertain to what extent landlords claiming a money judgment for rent arrears which are the subject of possession proceedings will need to comply with this Protocol.

Aims

The Pre-action Protocol for Debt Claims came into force on 1 October 2017.[1] It aims to:

  • encourage early communication between the parties, including exchanging information relating to the debt
  • enable the parties to resolve the matter without going to court, including by agreeing a repayment plan or using an Alternative Dispute Resolution (ADR) procedure
  • encourage the parties to act reasonably and proportionately – eg to avoid running up costs out of proportion to the sums at issue.

Scope

The Protocol does not apply where the debt is covered by another Pre-action Protocol, such as the Mortgage Arrears Pre-action Protocol.

The extent to which it applies to rent arrears (or service charge arrears) is uncertain, however any landlord who is considering applying to court for unpaid rent (whether or not as part of a claim for possession) should be aware that the court may consider compliance with the Protocol when making an order, and/or awarding costs.

Where the term 'tenant' is used below, this includes leaseholders.

Initial contact

Under the Pre-action Protocol for Debt Claims, the landlord/creditor must send a letter of claim to the tenant/debtor before applying to court for a money judgment. Information that must be contained in the letter of claim includes:

  • details of the debt and whether any interest is accruing (and if so, how much)
  • if regular instalments are being offered or paid, an explanation of why they are not acceptable
  • how the debt can be paid or how to proceed if the tenant wants to discuss payment options.

The landlord must enclose:

  • an up-to-date statement of account for the debt including interest or other charges that have been added. If no statement is provided, or is not fully up to date, the letter of claim must state the amount of interest and other charges imposed since the debt was incurred or since the statement was provided
  • the required regulatory information sheet containing advice on responding to the letter of claim, and a list of organisations offering free debt advice
  • the Reply Form at Annex 1 to the Protocol
  • a financial statement form (an example is provided at Annex 2 to the Protocol).

The letter of claim should be clearly dated towards the top of the first page and posted on that date. If it is not possible to send on that date, it should be sent the following day. The letter should be sent by post, but may in addition be emailed. Emailing alone is acceptable if the debtor has explicitly requested not to receive correspondence by post.

Response and time scales

The tenant should use the Reply Form sent by the landlord to respond to the letter of claim. Where the tenant does not return a Reply Form, the landlord may start court proceedings no sooner than 30 days from the date on the letter of claim, but should bear in mind that a form may have been posted towards the end of the 30 days.

In response, the tenant may request copies of any documents they consider relevant, and the landlord should either provide these or explain why they cannot be provided.

Where a Reply Form is returned, the landlord must wait for at least 30 days from receiving it before starting court proceedings. However, if the tenant indicates via the Reply Form that they are seeking debt advice, they must be given a reasonable period to obtain it. This could include extending the 30-day period. Also, if the debtor requests copies of relevant documents, the landlord must not start court proceedings any sooner than 30 days from the date s/he provides those documents.

If the tenant indicates on their Reply Form that they need time to pay, the landlord should try to reach agreement on an instalment plan with them, basing the repayment figures on the provisions of the Standard Financial Statement (or equivalent guidance). The Standard Financial Statement is a universal income and expenditure statement which contains a set of spending guidelines. The Money Advice Service provides information about this. The landlord must give reasons in writing for any refusal to accept a repayment offer.

A landlord should contact the tenant if the tenant’s Reply Form is incomplete to discuss the debt further.

If discussion following the return of a reply form does not result in agreement, the landlord should usually give at least 14 days notice of their intention to start court proceedings.

Alternative dispute resolution

If landlord and tenant cannot agree on any aspect of the debt, they must consider using an alternative dispute resolution (ADR) option. This may simply involve further discussion and negotiation, or could be more formal. For more information see the page Deciding whether to go to court

Postponing legal action

A landlord must not start a debt claim while the tenant (or leaseholder) complies with any agreement reached. If the landlord wants to start proceedings at a later date they must comply afresh with the Protocol, including sending a new letter of claim.

Compliance and sanctions

A landlord may be required by the court to explain how they have complied with the protocol. The court will be concerned with compliance in substance with the terms, and is less likely to concerned with minor or technical breaches. It will take into account non-compliance when giving directions for the management of proceedings and when making an order for costs.[2]

[1] The Pre-action Protocol for Debt Claims is available at www.justice.gov.uk/courts/procedure-rules/civil/protocol

[2] Practice Direction - Pre-action conduct and protocols, Ministry of Justice.

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