Back in October 2017, the Pre-Action Protocol for Debt Claims (“PAP”) was launched. PAP is part of the Civil Procedure Rules which govern how parties deal with litigation claims through the County Court and it was the first time that strict rules were put in place for pre-action conduct on a debt matter.
If you are a business chasing a customer, who is not a limited company or partnership, for overdue payments then PAP sets out specific rules that you must follow if you intend on taking this customer to Court. You must send a detailed Letter before Claim to your customer including various information and attachments including the amount of the debt, details of the agreement that you are chasing them in relation to, an Information Sheet, Reply Form and Financial Statement. Once the letter and attachments have been sent, you must wait 30 days for your customer to respond. If there is no response you can sue them. If they do respond then various time restraints come into play, depending on the nature of their response, meaning that the customer can string out this pre-legal stage to about 90 days if they wish.
After 4 years, PAP still seems to be working smoothly. My initial fears that nefarious debtors would use the PAP to delay matters for as long as humanly possible do not seem to be coming to fruition. All in all, things are the same. Some debtors respond and provide information as to why they cannot pay or why they dispute the debt whilst others ignore us. The main difference is that you have to wait a few weeks longer to sue the debtors who do ignore, or refuse to come to an agreement, which if you have cash flow issues is not particularly helpful.
We are still yet to see anyone be hit hard for ignoring PAP but I would still advise against ignoring it. If your claim proceeds to litigation, the Court will expect you to have complied with PAP. If you have not complied then you could end up with serious sanctions such as a big reduction in your costs award. For the sake of waiting a few more days to issue a Claim, it’s not worth the risk.
