The Government first announced plans for a shared ownership right to buy in October 2019. At the time the sector raised concerns about the impact the plans would have on housing associations ability to borrow. An election and a pandemic later the Government announced, during the CIH Housing Festival last week, the return of the right to shared ownership as part of its Affordable Homes Programme (AHP).
Below is a series of questions and answers to assist with the new Pre-Action Protocol (“the Protocol”) and are primarily aimed at creditors.
1. When does it come into force?
1st October 2017.
2. Who does it apply to?
Any business (including sole traders and public bodies) who is claiming payment of a debt from an individual. It could be a debt, for example, in relation to Council Tax, rent arrears, unpaid professional fees, unpaid private care fees.
3. Does an ‘individual’ include a sole trader?
4. Who does the Protocol not apply to?
Business to business debts (unless the debtor is a sole trader).
5. Are there instances when the Protocol does not apply?
Where another Pre-Action Protocol covers the debt, for example, mortgage arrears, and when claims are issued by Her Majesty’s Revenue and Customs (for the recovery of taxes and duties).
6. What is the purpose of the Protocol?
(i) To promote communication between the parties from the outset and to help identify any disputed issues;
(ii) To assist in resolving the matter prior to the issue of court proceedings. This may be by way of agreeing a repayment plan or by using an Alternative Dispute Resolution procedure;
(iii) To promote reasonableness and proportionality between the parties in their dealings with each other. For example, there is no point in running up costs for £5,000 when the debt is only £3,000; and
(iv) To help manage proceedings efficiently.
7. As the creditor, what do I need to do?
Send a Letter of Claim before proceedings are commenced to the debtor.
8. What should the Letter of Claim include?
- Debt amount;
- Details of interest/charges;
- Details of where the debt arises from;
- Information on any assignment of the debt;
- If instalments are being offered/paid by the debtor – why they are not acceptable;
- Methods of payment; and
- What the debtor should do to discuss payment options and address details for where the completed Reply Form should be sent.
9. Should I enclose anything with the Letter of Claim?
(i) It should enclose one of the below in relation to the debt:
(a) An up-to-date statement of account showing interest and charges;
(b) The most recent statement of account and in the Letter of Claim give details of interest accrued/charges levied since the debt was incurred; or
(c) Where there are no statements to provide the above information, it should be detailed in the Letter of Claim.
(ii) It should enclose a copy of an Information Sheet and Reply Form, both of which are standard documents annexed to the Protocol and a Financial Statement that seeks information about the debtor’s income/expenditure details, debts and the reasons for the debt(s).
10. How long should I wait after the Letter of Claim to issue court proceedings and what should I do if I receive a response from the debtor?
The debtor needs to reply within 30 days from the date of the Letter of Claim. If the debtor doesn't, then you can issue court proceedings to recover the sums due (subject to any other obligations you may owe the debtor).
If the debtor replies within 30 days from the date of the Letter of Claim and indicates they are seeking advice in relation to the debt, the creditor should allow the debtor a further 30 days from receipt of the Reply Form or a further 30 days from the creditor providing the debtor with any documents that have been requested by the debtor. The creditor is encouraged to agree on an instalment plan with the debtor where proposals are made. If the creditor doesn't agree with the proposal, reasons why should be given.
11. What happens if I do not comply with the Protocol?
Courts will take into account whether the Protocol has been complied with. In the absence of compliance, the Court may well impose sanctions such as not being able to recover interest/a reduced amount of interest, costs sanctions – having to pay the debtor’s costs (or a proportion of them) – or not being able to recover costs or at a reduced sum or a stay being imposed so that the Protocol can be complied with.
12. If the debtor responds to the Letter of Claim and agreement is not reached, do I need to do anything else before I issue court proceedings?
The creditor should give at least 14 days’ notice to the debtor of its intention to commence court proceedings.
13. Are limitation periods extended to allow compliance with the Protocol?
Care must be taken to ensure the limitation period for issuing a claim does not expire whilst the Protocol is being complied with. If appropriate, issue a claim and request a stay whilst compliance is effected.
14. What action do you need to take and how can Anthony Collins Solicitors help?
We can undertake the debt recovery work for you to ensure compliance with the Protocol which will allow you to focus on your business. Alternatively, we can prepare a precedent letter suite suitable for your business to include the Letter of Claim and 14 days’ notice of intention to commence proceedings letter together with the relevant enclosures. We can also review your current procedures/letters and advise on any necessary changes to ensure compliance with the Protocol. Should you wish to discuss the Protocol or any other aspects of recovering debt, including Alternative Dispute Resolution procedures, please contact Ramjeet Authi. If you would like further information about the work that we do, please visit our website.
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