Schools will need to comply with the requirements of the PAPDC or potentially face financial consequences. This article provides an overview of the PAPDC and explains how it applies to schools.
The Pre-Action Protocol for Debt Claims (the ‘PAPDC’) came into force on 1 October 2017. The PAPDC applies to schools seeking payment of a debt from an individual debtor and will therefore apply to the collection of all school fee debts.
Much more information is now required under the PAPDC within a letter of claim and debtors should be given more time to respond along with an opportunity to make payment proposals throughout the pre-action process.
Schools will need to comply with the requirements of the PAPDC or potentially face financial consequences. This article provides an overview of the PAPDC and explains how it applies to schools.
The PAPDC describes the conduct the court will normally expect of parties involved in debt claims against individuals prior to the start of proceedings.
The PAPDC provides a prescribed list of initial information which must be provided by the school within the letter before claim. This information includes:
For the letter before claim to be complaint, it must be:
A series of documents must be attached to the letter before claim including:
The debtor must respond to the letter before claim within 30 days of the date detailed at the top of the letter. The reply must be made using the Reply Form and the debtor must state whether they agree with the debt or not.
You will be entitled to start proceedings (provided that you give 14 days’ notice to the debtor of your intention to do so) if the debtor does not reply.
Alternatively you could look towards other means of debt recovery, such as serving a statutory demand. However statutory demands can only be enforced through bankruptcy proceedings if the individual’s debt is for £5,000 or more.
If the debtor advises you that they are seeking debt advice, a reasonable amount of time should be allowed for the advice to be obtained.
There are a number of points which must be taken into account including:
Failure to comply with the PAPDC may result in:
None of the points mentioned above are good news for schools and to avoid such consequences you must comply with the requirements of the PAPDC. You must ensure that any current debt recovery process which is in place against individuals is up to date and in line with the PAPDC.
Breathing space, officially called the Debt Respite Scheme (“the Scheme”), is a government scheme which attempts to help relieve some of the pressure and stress to debtors caused by being in debt. This is an important scheme for schools to be aware of.
The Scheme was launched by the Government on 4 May 2021. The aim of the Scheme is for individual debtors to have breathing space to focus on getting debt advice and setting up a debt solution without worrying about being chased for payment or incurring extra charges. Debtors will need to pass eligibility checks so that creditors won’t be able to add interest or fees to debts or take enforcement action for 60 days. Debtors do need to keep making regular payments if they can afford to do so.
For more details about the Scheme and its implications for creditors, please see our related article.
For schools dealing with individuals or sole traders, the PAPDC requires a greater degree of patience when collecting outstanding debts. Schools need to be aware that they have more onerous obligations under the PAPDC due to the requirement to provide much more detailed information to debtors.
Prompt action should be taken when debt arises. More consideration will be required to evaluate whether it is worthwhile engaging in the process of collecting outstanding debts based on the amount of the debt in comparison with the time and cost dealing with such matters and the resources available.
If debt arises, every effort should be made to resolve matters without the need for proceedings. There is a very clear message under the PAPDC that litigation should be a last resort. If proceedings are necessary, the PAPDC should be complied with prior to issuing court proceedings as the court will expect this of both parties.
If a debtor notifies you that they are in breathing space under the Scheme, you should pause the recovery action immediately.
If you have any questions on the PAPDC, your debt recovery process or the Scheme, please get in touch.
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