The seven day letter before action is not yet a thing of the past. However, the conduct of the Claimant before the issue of proceedings is now under scrutiny following the implication of new practice directions and pre-action conduct guidelines.
The new practice directions do not form part of the Court’s general protocols but they do form a guide to pre-action conduct and specify what the Court considers to be reasonable. The recommendations particularly apply to businesses seeking to recover debts from individuals.
The key points of note are:-
• A letter of action in a straight forward undisputed debt should give a debtor 14 days to acknowledge and provide a full response;
• The letter should also include confirmation that free independent advice and assistance can be obtained from certain organizations; for example, National Debtline, Consumer Credit Counselling Service and Citizens Advice;
• Options and methods of repayment should also be suggested to provide options to the debtor.
Most debtors will be unaware that there is a recommended course of conduct in replying to such a letter should they take up the option of debt advice. The court would consider it reasonable for the debtor to acknowledge the letter before action, advise that they are taking advice and indicate from which organisation. It is expected that this would take no longer than 14 days.
This additional time given to debtors would only be considered reasonable if the debtor has not previously sought such assistance. The Court is mindful that delays can prejudice a Claimant’s ability to recover debts and therefore there is no obligation upon a Claimant to wait in circumstances where debt advice has been previously obtained.
Is it worthwhile therefore changing the seven day letters to fourteen? This very much depends upon the sanctions imposed by the Court. Currently as these are guidelines to conduct, the Court has a discretion to order sanctions against a party that does not comply if the matter is litigated. The sanctions available to the court can include staying the proceedings until certain steps have been taken, changing the interest rates against the non-compliant party or making an adverse costs award.
It is too early to tell how the Courts will deal with these changes. As a business dealing with a debtor who is an individual, it is prudent to act in accordance with the recommendations as, whilst adding a further seven days to the initial letter of claim may be frustrating, it is far better than incurring facing sanctions imposed during the course of proceedings.
For further information on recovering your business debts contact our debt recovery team on 01604 828282 or 01908 660966 or complete the online contact form on our website www.franklins-sols.co.uk or email info@franklins-sols.co.uk
