At some point in time, it is likely that all businesses are owed a debt in some form or another. For most people, the thought of having a County Court Judgment taken out against them is enough to pay the sums that they owe. But, for some people this threat is still not enough and legal action is often the next option.

However, from the 1st of October 2017, new rules will be in place regarding the steps that a creditor must take before they can take Court action against an individual that owes them money.

 

The new rules set out that when an initial letter before action is sent out to the debtor, it must contain prescribed forms and documents which the debtor must complete with their response. More importantly, the debtor is now entitled to 30 days from the date of the letter in which to respond before Court proceedings can be issued.

 

In addition to this, if the debtor has indicated they are seeking debt advice, they must be allowed at least an additional 30 days before Court proceedings are issued.

 

The debtor is also now entitled to request evidence that the debt is legally owed and appropriate steps should be taken by both parties to reach an agreement before escalating matters, such as mediation or arbitration. If any of these steps are not complied with correctly, the onus is on the creditor to contact the debtor and attempt to understand their position.

 

Finally, 14 days notice must be given to the debtor in a last attempt to resolve the matter before Court proceedings are issued.

 

Therefore with 30 days to respond, 30 days to seek debt advice, 30 days to receive further information and 14 days warning before issuing Court proceedings – it could be up to 104 days before a creditor can issue Court proceedings!

 

The sooner the formal process is started, the earlier the debt may be recovered.

 

These new rules apply to all businesses, small or large, regardless if there is legal representation. If you own or operate a business, it is important these new rules are followed if you are looking to reclaim

a debt.

 

If you need support on these types of matters contact me gchampion@jmp-solicitors.com

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