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Recovering Debts Will be Tougher Under New Rules

A new measure that was introduced on 1 October 2017 – the Pre Action Protocol for Debt Claims – aims to improve communication between debtors and creditors, and lessen the likelihood of court action.

It has laudable objectives, but certain provisions related to sole traders could complicate debt recovery both for companies that do a lot of business with them, and for sole traders themselves.

For instance, the new rules also set out a list of information to be provided by the creditor by way of a letter of claim before any issuing of proceedings. The letter must give the debtor 30 days to pay the debt, and the creditor must also consider any offer from the debtor to pay by instalments.

These and other new demands have the capacity to cause a real headache for companies and sole traders that are unprepared for the protocol.
However, it need not cause problems if businesses tighten up their contractual terms and credit control procedures, and have clear debt recovery procedures in place. With these mitigating steps, it shouldn’t become a problem.

Ally Tow heads up the debt recovery team at Boyes Turner – who have a specialist practice in the leisure and hospitality sector. The team has a track record of helping small independent operators within this sector.

Tel: 0118 958 7150 or email:
leisurehosp@boysturner.com

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