What is Pre-Action Protocol?

Pre-Action Protocols are rules set out in the Civil Procedure Rules (CPR) that describe the steps courts expect parties to take before issuing court proceedings. The Pre-Action Protocol for Debt Claims applies where a business creditor, including a sole trader, claims payment from an individual, including a sole trader. A business-to-business claim against a company may instead be governed by another protocol or the Practice Direction on Pre-Action Conduct.

Purpose of pre-action protocols: - Encourage early settlement of disputes without court action - Ensure both parties have enough information to understand the claim - Promote alternative dispute resolution (mediation, arbitration) - Help courts manage cases efficiently when they do proceed

Where the Debt Claims Protocol applies: 1. Send a Letter of Claim - Explain the debt, agreement, interest or charges, payment details and how the debtor can respond 2. Include the prescribed enclosures - The Information Sheet, Reply Form and a statement of account or equivalent debt details 3. Allow adequate time to respond - Normally at least 30 days from the date of the letter 4. Exchange information and consider ADR - Respond to reasonable requests and consider negotiation or mediation before court action

• **Consequences of non-compliance:**
• If you file a claim without following pre-action protocols, the court may:
• Stay (pause) your claim: until you comply
• Order you to pay the defendant's costs: even if you win
• Refuse to award interest: or limit it
• Take non-compliance into account when making decisions about costs

For debtors receiving a Letter of Claim under this protocol: Respond within the stated 30-day period. You can admit the debt and propose payment terms, dispute some or all of it with reasons, or request more information. Ignoring the letter can affect the later court process.

Key point for freelancers and small businesses: Following the correct pre-action process gives both sides a structured opportunity to exchange information and resolve the dispute without court. Identify the parties' legal status before assuming the Debt Claims Protocol applies.