From this October, increased regulation and higher compliance costs will make collecting consumer debt a more challenging task.
The proposals, as published by the Ministry of Justice (MoJ), will see individuals given 31 days to respond to a letter of claim pursuing debt.
This is an increase of a third from the current 21 days.
Following this, if an individual fails to pay, another letter must be issued giving a further 14 days of grace.
Creditors will also have to provide more detailed information about debtors, although plans to force the creditor to show the original credit agreement have since been disbanded.
The MoJ said this will apply to consumer debt only, not business-to-business. It said it is keen to enable parties to resolve the matter without starting court proceedings, including agreeing a reasonable repayment plan or considering using an Alternative Dispute Resolution (ADR) procedure.
“Where a debtor indicates in the Reply Form that they require time to pay, the creditor and debtor should try to reach agreement for the debt to be paid by instalments, based on the debtor’s income and expenditure,” it said in its report.
“In trying to agree affordable sums for repayment, the creditor should have regard where appropriate to the provisions of the Standard Financial Statement or equivalent guidance.”