Lawyers support plans to make debt letters less threatening

Government plans to change the language and presentation of information in debt letters to help people better manage their debts, have been welcomed by specialist debt recovery lawyers.

The new rules are due to come into force in December 2020 and will mean debt letters are easier to understand, less threatening and will assist debtors to source free debt advice.

Letters will have a restriction on the amount of information that must be made prominent and will be required to use bold or underlined text rather than capital letters.

Sophie Kemp, a solicitor and team supervisor in the debt recovery team at national law firm Clarke Willmott LLP, said: “In the current climate with many people experiencing redundancies and pay cuts, these rules are the latest in a package of support put in place to help people struggling with their finances and to be sensitive to their circumstances.

“The changes represent a welcome change in encouraging customers to address any difficulties they may be experiencing with debt and to ask for help from the free debt advice sector when they need to”.

“Getting behind on credit repayments can be a really stressful experience and intimidating letters from lenders can often leave people feeling confused and helpless.

“By looking at the legislation around these letters the Government is helping to take the fear out of the situation and empowering people to take control.”

It is a long established and fundamental part of the Civil Procedure Rules that litigation should always be a last resort and every effort should be made by the parties to engage with each other before a claim is issued.

The pre-action protocol for debt claims was introduced in October 2017 and took big steps to achieving this in debt actions against individuals (including sole traders) prior to court proceedings being issued. As well as other measures, it introduced a requirement for creditors to signpost individuals to sources of free debt advice which is a step the new proposals are seeking to introduce at a much earlier stage.

Sophie continued: “At Clarke Willmott we welcome the proposed changes as it aligns with our existing approach of treating customer’s fairly, making every effort to reach an amicable solution and of litigation being a last resort.

“It will send a consistent message throughout the entire process and will encourage customers to engage from the outset and for the parties to do all that is possible to achieve a positive outcome.

“The new rules will be delivered through secondary legislation and are expected to come into force at the end of the year, with all lenders required to make the changes within six months.”

Clarke Willmott is a national law firm with offices in Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton.

The firm’s leading debt recovery team has been operating for over 25 years combining the abilities of a debt collection agency with the expertise of a top law firm. Ranked as Tier One in the Legal 500 guide, the team aims to settle most cases quickly without the need for formal legal action.

For more information visit www.clarkewillmott.com