Debt Collection

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Our firm has extensive experience in acting on behalf of both plaintiff and defendant in relation to personal injury actions*. In handling these cases the firm has experience in dealing with the Personal Injuries Assessment Board and District, Circuit and High Court claims.

We can advise on all aspects of the debt collection process including:

  • The issue of a demand letter which may lead to prompt payment by a debtor;
  • The negotiation of a repayment plan;
  • The institution of court proceedings, if necessary to obtain judgement;
  • Pursuing defaulting creditors in the District, Circuit and High Court.
  • The enforcement of judgments including foreign judgments.

Before commencing a legal debt recovery case, clients must have the following accurate information:

  • Their own legal status
  • The debtor’s legal status
  • The correct address or registered office for the debtor
  • The exact amount of the debt (liquidated sum)
  • The basis of claim, e.g goods sold and delivered or arrears of rent

This section provides an insight into the general queries raised at the pre-judgment stage and outlines the jurisdiction of the various courts.

The Creditors Legal Status

The correct legal title of the Creditor or Plaintiff must appear on all proceedings.
If money is owed to an individual, proceedings are taken in that individuals name. Both the christian and surnames are necessary.
If money is owed to a company, the exact title of the company must appear on the proceedings. The correct address of the registered office is also essential.

The Debtors Legal Status

The correct legal title of the Debtor or Defendant must appear on all legal proceedings.
When seeking to recover a debt, time must be taken to properly identify the legal title of the debtor.
The full correct title of an individual or Company is absolutely essential. In the case of an individual, both christian name and surname are necessary.

In the case of a Company, are you suing XYZ Limited or XYZ (Ireland) Limited?
A mistake in the debtors title could result in the proceedings being re-issued.

Basis of Claim

The basis of claim must be clearly identified in the proceedings. The entitlement to claim for the recovery of debts due and owing generally arises under some form of a contractual relationship.

Typically, debts arise from non-payment for goods sold and delivered, or services rendered. Other debts arise due to cheque payments which have failed to clear through a bank account, or on foot of arrears of rent or service charges on property.
There are numerous reasons as to why one person can become indebted to another and the basis for each claim will have to be ascertained on the facts.

Jurisdiction of Courts

It is probably true that most people would prefer to avoid the courts. However, this is not always possible. Creditors will at some stage or another find themselves having to engage fully with the court system to recover debts.
At present there are three court jurisdictions and the amount of the debt will determine the court in which the claim is to be taken.

They are as follows:

  • District Court – 0 – €15,000
  • Circuit Court – €15,000.01 to €75,000
  • High Court – Amounts over €75,000

Obtaining Judgment

The procedure for obtaining judgment depends on whether or not the case is defended.

The purpose of legal action is to encourage the debtor to pay. If the debtor pays at any stage during the process, legal action can be stopped. If the debtor refuses to pay, legal action will continue until the debt and costs are paid in full or the debtor makes a settlement.

Where a debtor fails to pay, the court will grant judgment in favour of the creditor. This is a decision of the court confirming that the debt is owed by the debtor to the creditor for the amount stated on the judgment together with costs.

Letter of Demand

The debtor must always be made aware of the debt and be advised of any impending action by a creditor. For this reason, the first step in a typical debt recovery action is the issue of a letter before action (LBA).

The LBA will state that the debtor is on notice of a claim for a debt, that it must be paid within a specified time frame, usually seven days and that failure to do so will result in the issue of legal proceedings without further notice to the debtor. It further warns that costs will be claimed if legal action becomes necessary.

The letter in itself is often all that is required to make the debtor appreciate the error of his ways and discharge his indebtedness.

Issuing and Service of a Court Summons

If the debtor fails to respond to the LBA within the time allowed, Court proceedings are issued and served. Great importance is attached to issuing the proceedings seven days after the LBA. This is to maintain momentum and to ensure that the debtor knows how serious the matter is.

Issuing court proceedings is the process whereby the appropriate endorsement of claim is drafted, the summons stamped with the required stamp duty and is submitted to the relevant court office for the allocation of a record number.

Once these matters have been attended to, the proceedings can then be served on the debtor.

-District Court – Claim Notice
-Circuit Court – Civil Bill
-High Court – Summary Summons

In the District Court, when a Claim Notice is being issued a statement of claim must be prepared and inserted into the claim notice. The statement of claim must contain a list of all correspondence and other documents on which the claimant will rely at the trial including the date, if any, and a brief description of each document. Any documents that are not included in the statement of claim cannot be relied upon at the hearing of the case should the case be defended by the debtor.

In District and Circuit Court cases, the Summons is served by registered post. In High Court cases, the Summons must be served personally. A Company is always served by ordinary prepaid post.

Affidavit of Debt

Debt recovery matters are unique in that they can be dealt with summarily by the Courts. This means that if the debtor fails to respond within the time frame specified in the summons, the creditor may apply to the court for an order for judgment. This is done on foot of an Affidavit of Debt and without the necessity for a Court hearing.

The Affidavit of Debt is drafted at the earliest possible date allowed by the court rules and states the amount due and owing. The Affidavit must be signed by the Creditor and sworn before a Commissioner for Oaths. It must then be lodged along with other documents in the relevant court office in order to obtain judgment.

Summary Judgment

An order for judgment in favour of a creditor where the debtor does not defend the claim is referred to as Summary Judgment.

The manner in which Summary Judgment is obtained varies in each Court, but there are a number of common features throughout.

In each case a judgment set is lodged in the relevant Court. The judgment set consists of the Summons, Proof of Service and the Affidavit of Debt sworn by the Creditor together with several other legal documents relevant to each specific Court.

Defended Cases

Every debtor has a right to defend a claim against him.

For this reason, the creditor should always be satisfied that the claim he is making is provable. A debtor may notify that he intends to defend a claim.

This may turn out to be a delaying tactic, but on the other hand, it may be a genuine confirmation of his intention to proceed to a full defended hearing.

Some of the more common issues encountered in each jurisdiction are dealt with in the menu items. However, each case requires specific attention and a creditor should always consult very carefully with his/her legal advisors if a case is defended.

District Court – Debts under €15,000

When a debtor wishes to defend a District Court Claim Notice he may notify his intention to defend the proceedings by entering into court both an Appearance and a Defence. These must be entered not later than 28 days after the service of the claim notice on him and a copy should also be sent to our office.

The debtors Defence must state whether the claim is:

(a) disputed as to both liability and amount;
(b) disputed only as to amount and if so, what amount is admitted to be due;
(c) admitted in full and if so, whether the respondent proposes to pay immediately or requires time for payment.

Once an Appearance and Defence have been entered a Notice of Trial will be issued and a hearing date will be provided. Both parties will be required to give evidence at the hearing and the Plaintiff must prove his claim.

Circuit Court – Debts of €15,001 to €75,000

The procedure for defending a case in the Circuit Court is more intricate than at District Court level. Here, the debtor notifies his intention to defend proceedings by way of an “Appearance”. This allows the debtor 10 days to enter a Defence.

However, the entry of a Defence may be delayed by a Notice for Particulars to which the Plaintiff must reply.

When the pleadings are finalised, the matter is set down for trial. Both parties will be required to give evidence and the Plaintiff must prove his claim. This process will require close consultation between the creditor and his/her solicitor.

High Court – Debts over €75,000

If a debtor intends to defend a High Court case, his/her Solicitor will enter an Appearance. If no Defence is forthcoming, an Affidavit of Debt is signed and sworn before a Commissioner for Oaths. This Affidavit together with a Notice of Motion seeking Judgment is filed in the High Court Office and a date is given for a hearing before the Master of the High Court.

At the hearing, if the Master is satisfied that the debt is due and owing, he will grant liberty to enter final Judgment. This Order together with other documents are then lodged in the Central Office of the High Court and Judgment is granted.

If on the other hand, the Master is satisfied that the defendant has a genuine dispute he will send the matter for Plenary Hearing.

Plenary Hearings

In High Court actions for a liquidated debt, a full or complete hearing on the merits of a case subsequent to the issue and service of Summary Summon is known as a Plenary Hearing. This hearing usually follows a direction from the Master’s Court that the case be adjourned for Plenary Hearing. Hearings of this kind do not involve a jury but are heard before a judge of the High Court and only after a full Book of Pleadings has been prepared. This will include, – (but is not limited to), – the Summary Summons, Memorandum of Appearance of the Debtor and other essential notices, in particular the Particulars of Claim, the Replies to Particulars, and the Defence. Once all necessary papers are in order the Certificate of Readiness is lodged by the Creditor’s solicitor and this will enable the matter to be set down for hearing.

Commercial Court

The Commercial Court is a division of the High Court dealing with claims exceeding €1,000,000. The Commercial Court has proved highly effective in disposing of commercial disputes. The majority of cases in the Commercial List are concluded within three months of proceedings being initiated.

Entry in to the Commercial Court is brought by motion on notice to the Judge of the High Court of the Commercial List. Summary proceedings may be heard on affidavit without pleadings. A certificate from the applicant’s solicitor specifying how such proceedings qualify for entry into the High Court Commercial List is also required. On hearing the Motion the Judge can direct that proceedings be entered into the High Court Commercial List. When proceedings are adopted the Judge will fix a date for an initial directions hearing or alternatively treat the hearing of the motion as the initial directions hearing. The pre-trial process of the Commercial Court provides for a case management conference and a pre-trial conference where both contested issues and uncontested issues are addressed. Once this is complete the matter will proceed to trial.

Mortgage Arrears Litigation

Proceedings for Possession Orders can be brought in either the High Court or the Circuit Court and where the mortgaged property is located.

Proceedings in the Circuit Court are brought by way of a Civil Bill for Possession. Order 5 B of the Rules of the Circuit Court (as inserted by SI 264 /2009) details the procedure where proceedings are commenced seeking recovery of possession of Lands. Every Civil Bill for Possession must be served with an Affidavit verifying the Plaintiffs claim. A defendant intending to defend the proceedings shall within ten days after service of proceedings shall defend the plaintiffs by filing a replying affidavit.

Proceedings in the High Court are brought by way of a Special Summons and Grounding Affidavit. The Summons will provide for a return date before the Master of the High Court. The Master will review the papers and ensure service has been properly effected especially where no appearance has been entered. The Master will transfer the matter into the Chancery Special Summons List before a Judge of the High Court when all the papers are in order. Adjournments may be granted where there are payment proposals put forward or where a sale is pending. When an order is granted the Court will generally put a stay on the order except where the property is vacant or is falling into serious disrepair. When the order is granted the bank will then be able to rely on the statutory power of sale.


Enforcement

When judgment is obtained and the debtor still refuses to pay the outstanding debt, clients instructions are sought regarding the enforcement of the judgment.

There are several methods of enforcement, which may issue at any time within six years of the judgment.

Some enforcement methods are only available against individual debtors while others are only used against companies.

In each case, the preferred enforcement option will be determined having regard to the background information gained in relation to the debtor’s circumstances.


Corporate Enforcement of Judgment

Publication

Once a Judgment has been obtained it can be registered in the Central Office of the High Court. This leads to the publications of the name of the debtor and the amount of the Judgment in Trade Gazettes.

This will affect a debtor’s credit rating which can have serious consequences that the debtor may wish to avoid. Frequently, the threat of this enforcement action will be enough to result in payment by the debtor.

Execution By Sheriff

A creditor may choose to lodge the Judgment Order with the Sheriff in the area where the debtor resides or conducts his business.

By doing so, the creditor is requesting the Sheriff to seize goods from the debtor and to sell them for the purpose of raising money to satisfy the amount of the judgment.

The procedure is important as some other methods of enforcement may require the Court being satisfied that the Sheriff has been unable to execute the judgment in this way (e.g. Bankruptcy).

It should be noted that where it would not be economically viable to seize goods, the Sheriff will often enter into instalment arrangements with debtors.

Judgment Mortgages

A judgment mortgage can be obtained by a creditor who has obtained judgment against a debtor who owns land or property.

When a judgment is validly registered as a mortgage, it creates a legal charge over the debtor’s interest in the lands or property resulting in two main consequences:

The debtor cannot sell the lands or property until the mortgage is firstly discharged.

The creditor may enforce the judgment mortgage by seeking a Court Order for the sale of the land or property. The proceeds of such a sale will be used to discharge the judgment.

Garnishee Orders

Where a third party owes money to the debtor, the Court can make a further Order directing the third party to pay the sums due directly to the creditor.

This method of legal execution can be very effective where circumstances permit its use. The Creditor must first have obtained a Judgment against the Debtor.

Receiver By Way of Equitable Execution

Where money is due to be paid to the debtor at certain future dates e.g. periodic rents, the Court may appoint an independent person to receive the money payable to the judgment debtor as and when the money falls due. In this way, the Receiver receives the money instead of the debtor. The Receiver accounts for the money coming into his hands and pays the Creditor.

The Creditor must have a Judgment Order against the Debtor.

Injunctions

An injunction is an Order of the court directing a party to do or to refrain from doing something. Injunctions can vary in duration and can be either: 1. Prohibitory – restrictive/preventative or 2. Mandatory – compulsory

A Court Judgment is not necessary to apply for an Injunction.

An Injunction can be sought by a creditor in the following circumstances:

  • Mareva Injunction – to prevent a debtor from knowingly disposing of or reducing assets below a certain monetary level for the purpose of avoiding paying a debt.
  • Ne Exeat Regno- to prevent the debtor leaving the jurisdiction.
  • Anton Pillar Order – to prevent the destruction or removal of evidence. This is used also to compel the debtor to disclose to the creditor the whereabouts of specific documents or items.

Examination of Directors

In the event a judgment is obtained against, for example, a limited liability company, the possibility of examining officers of the company before the court – with a view to assisting discovery and execution of the judgment – is a valuable tool. Any officer of a company may be examined orally and cross-examined as to the assets of the company. While such officers are not personally liable, the process can produce valuable information where consideration is being given to the winding-up of the company. The prospect of such examination may bring about payment of debt owing to the creditor.

Liquidation

When a company is unable to pay its debts it is said to be insolvent. In such circumstances, a number of events may follow one of which is the voluntary or compulsory liquidation or “winding-up” of the company. The process of liquidation involves, amongst other things, the collection of all assets of the company by a liquidator and the distribution of any net proceeds (after deduction all costs and expenses) to creditors of the company in order of priority, followed by the eventual dissolution of the company itself pursuant to the appropriate provisions of the Companies Acts.


Individual Enforcement of Judgment

Publication

Once a Judgment has been obtained it can be registered in the Central Office of the High Court. This leads to the publications of the name of the debtor and the amount of the Judgment in Trade Gazettes.

This will affect a debtor’s credit rating which can have serious consequences that the debtor may wish to avoid. Frequently, the threat of this enforcement action will be enough to result in payment by the debtor.

Execution By Sheriff

A creditor may choose to lodge the Judgment Order with the Sheriff in the area where the debtor resides or conducts his business.

By doing so, the creditor is requesting the Sheriff to seize goods from the debtor and to sell them for the purpose of raising money to satisfy the amount of the judgment.

The procedure is important as some other methods of enforcement may require the Court being satisfied that the Sheriff has been unable to execute the judgment in this way (e.g. Bankruptcy).

It should be noted that where it would not be economically viable to seize goods, the Sheriff will often enter into instalment arrangements with debtors.

Examination, Instalment & Committal Orders

Examination Order: An Examination Order follows service of a summons requiring the debtor to complete a Statement of Means and to attend Court to be cross examined regarding his means. At the Examination hearing, a Judge may make an Instalment Order having regard to the debtors means. Even if the debtor refuses to attend Court, the Judge may award an Instalment Order in his absence.

Instalment Order: An Instalment Order compels a debtor to repay by instalments the amount of the debt and legal costs which are due. If the debtor fails to comply with the Order, then a Committal Order can be sought from the Court.

Committal Order

This is an Order, which directs that the debtor be arrested and committed to prison for contempt of Court for failure to comply with the terms of the Instalment Order.

Judgment Mortgages

A judgment mortgage can be obtained by a creditor who has obtained judgment against a debtor who owns land or property.

When a judgment is validly registered as a mortgage, it creates a legal charge over the debtor’s interest in the lands or property resulting in two main consequences:

The debtor cannot sell the lands or property until the mortgage is firstly discharged.

The creditor may enforce the judgment mortgage by seeking a Court Order for the sale of the land or property. The proceeds of such a sale will be used to discharge the judgment.

Bankruptcy Orders

Bankruptcy is a legal process for the benefit of creditors where the debtor is unable or unwilling to discharge his debts.

In order to commence this enforcement action, the debtor must have committed an act of Bankruptcy (e.g. a judgment returned by the Sheriff marked “No Goods/Nulla Bona” is an act of Bankruptcy).

Where a debtor is adjudicated a Bankrupt by the High Court, the property of the debtor becomes vested in the Official Assignee (an officer of the High Court). The result is that the Bankrupt loses his/her capacity to deal with the property. The debtor’s property is then realised for the benefit of the creditors.

Garnishee Orders

Where a third party owes money to the debtor, the Court can make a further Order directing the third party to pay the sums due directly to the creditor.

This method of legal execution can be very effective where circumstances permit its use. The Creditor must first have obtained a Judgment against the Debtor.

Receiver By Way of Equitable Execution

Where money is due to be paid to the debtor at certain future dates e.g. periodic rents, the Court may appoint an independent person to receive the money payable to the judgment debtor as and when the money falls due. In this way, the Receiver receives the money instead of the debtor. The Receiver accounts for the money coming into his hands and pays the Creditor.

The Creditor must have a Judgment Order against the Debtor.

Injunctions

An injunction is an Order of the court directing a party to do or to refrain from doing something. Injunctions can vary in duration and can be either: 1. Prohibitory – restrictive/preventative or 2. Mandatory – compulsory

A Court Judgment is not necessary to apply for an Injunction.

An Injunction can be sought by a creditor in the following circumstances:

  • 1) Mareva Injunction – to prevent a debtor from knowingly disposing of or reducing assets below a certain monetary level for the purpose of avoiding paying a debt.
  • 2) Ne Exeat Regno – to prevent the debtor leaving the jurisdiction.

Anton Pillar Order to prevent the destruction or removal of evidence. This is used also to compel the debtor to disclose to the creditor the whereabouts of specific documents or items.

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