PAP: Ny procedure for inddrivelse af tilgodehavender

The Effects of PAP LBA Implementation

As the proposed changes will affect any businesses collecting debts from an individual, namely sole traders or partners of a partnership (if individuals) within the UK, it is now more important than ever that our clients know who they are doing business with, or when signing a contract or agreement. Getting things right at the start will save time and unforeseen costs further down the line.

It is also advisable that clients closely monitor the status of sole traders as they could incorporate their non-limited businesses or cease to trade as a limited company without providing any notice.

“PAP” Letter Before Action (LBA) will not apply to debts owed by limited companies, unless the debt is backed by a personal guarantee issued by one of the company directors.

What are the PAP LBA Requirements?

The proposals are all pre-legal, starting with a Letter Before Action. However, under PAP guidelines there is now a prescribed list of information, which is compulsory to each LBA PAP and this needs to be provided to the debtor, including:

• The amount of the debt
• Whether interest and other charges are continuing.
• Whether the debt arises from a written agreement (date of the agreement, affected parties and the fact that a copy of the written agreement can be provided if requested).
• Whether the debt arises from a verbal agreement (who agreed it, what was agreed, and where and when it was agreed).
• Details of any assignment of the debt (when it was assigned and to whom).
• If regular part payments are being made, an explanation as to why the offer is not acceptable, request a raised offer, etc.) is required.
• A Reply Form and a Financial Statement Form (for the sole trader to complete).
• The address to which the above forms should be returned to.