Legal Procedures for Collecting Debts in Ireland

Originally published: Jun-24-2008

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By Mason Hayes + Curran
Attorneys at Law, Ireland

For any business, a key element in the profitability equation is the prompt collection of cash due. In many instances, this can be achieved by a timely demand letter or dialogue with the debtor by professional collection personnel. If this fails, an agreed-upon escalation process leading to legal proceedings, if necessary, should be in place.

Legal proceedings should be the last course of action and sensible pre-legal avenues should be explored first. Prior to embarking on the full legal process, certain crucial matters should be considered, such as the likelihood of success and whether the case will be contested. Each of these factors will have an impact on the length of time it takes to resolve the matter and the extent of the costs involved.

Ireland, like other jurisdictions, has its own legal procedures and enforcement options that allow creditors to pursue their outstanding debtors through the Courts. The venues available are dependent upon the nature of the case and, more importantly, its value.

The Irish Courts

The Irish Courts are structured on a hierarchical basis and each has a process that must be adhered to throughout the course of the action.

District Court Process for Uncontested and Contested Accounts

Debts up to €6,350
There are District Courts in most Irish towns

Circuit Court Process for Uncontested and Contested Accounts

Debts between €6,350 and €38,092
There is a Circuit Court in every Irish county

High Court Process for Uncontested and Contested Accounts

Debts greater than €38,092
The High Court is based in Dublin for Debt Collection cases

Interest on Irish Commercial Contracts

Interest can be claimed at the contract rate in any proceedings. However, where there is no contractual provision, the Court may award interest at its discretion. Also, for business-to-business contracts entered into after August 8, 2002, European Union regulations now allow for interest to be charged on all late payments (after 30 days have lapsed) at a rate of interest linked to the European Central Bank base rate. After judgment is awarded, interest is automatically applied to the judgment debt at the statutory rate, which is currently 8%.

Reimbursement of Costs

Costs awarded to creditors vary depending on the amount due and the Court involved. Amounts are generally low, unless the case is defended.

Post Judgment Options

Publication: To bring a judgment to the attention of the public at large, it must be published. Judgments, once registered, are published in the Experian All Ireland Gazette, Stubbs Gazette, and various commercial databases. These gazettes are widely read by bank managers, credit controllers, finance houses, etc.

The Sheriff: Each county in Ireland has a Sheriff who is a civil servant and whose responsibility is to seize and sell goods belonging to Judgment debtors in the discharge of debt. There can be long delays in this process and often the Sheriff can decide that the debtor has no goods worth seizing and selling. The Sheriff will NOT seize the tools of trade or essential household items.

Instalment Order Process: (This is only applicable to individuals, not companies.) After judgment has been obtained in Court, the relevant debtor can be called to attend at the District Court to be examined as to his/her means. The judge will decide the level of weekly/monthly debt payments the debtor can make and will usually make an Instalment Order directing the debtor to make the repayments. The repayments will commence once the order is served on the debtor. It is unusual for a District Court judge to give an Instalment Order against an unemployed debtor. If the debtor does NOT make the repayments, the creditor can go back to the District Court and seek to have the debtor committed to prison for non-payment (by Committal Order) -- a witness from the creditor is required to give oral evidence in this process.

Garnishee: A Garnishee Order is an effective legal enforcement option, although this is dependent on the creditor having good intelligence on any monies due by a third party, but not yet paid, to the debtor. In such circumstances, the creditor can apply to the Court for a Garnishee Order, directing that such monies be paid by the third party directly to the creditor. Timing is important ensuring that the third parties are advised of the Garnishee Order before the monies are paid to the debtor.

Receivership by way of Equitable Execution: This is a similar process to garnishee, except that the ultimate objective is for the creditor to receive the net sale proceeds of an asset belonging to the debtor. An example of this would be the sale of a car, land, or house. Under certain circumstances, the Court may prefer to appoint a Receiver, such as an attorney firm, where the creditor is unsure of how much money the debtor will receive.

Judgment Mortgage: In Ireland you can search property registers to see if the debtor owns any real property. Once the judgment has been obtained, the creditor can apply in Court to have a Judgment Mortgage registered on the deeds of the debtor’s property. This effectively prohibits any dealings with that property, unless the relevant debt is discharged. The creditor can take a further step and have the relevant property sold to discharge debt, by applying to the Court for a Well Charging Order and Order for Sale of the property.

Winding up of a Limited Company: To pursue the repayment of a debt from a limited company, one of the options open to the creditor is to petition to wind-up the company. Such proceedings can be quick and effective and are often an additional inducement to the company to repay the debt, so that this serious sanction is avoided. To avoid spurious defences and the disapproval of the High Court, it is advisable to obtain a judgment beforehand, or at the very least, a written confirmation from the debtor company admitting the debt.

Bankruptcy: This applies to individual debtors only; it does not apply to corporate debtors. When a creditor fails to have a debt repaid following a judgment, one option open is to declare the debtor bankrupt. Again, this is a serious inducement for the debtor to repay, if they have the means to do so. The creditor can seek to bankrupt an individual without a judgment from the Courts, though in practice many bankruptcy actions are taken where a judgment has been granted and returned nulla bona (no goods) by the Sheriff. Bankruptcy proceedings must be brought in the High Court and must involve debtors owing over €1,905. Unlike similar procedures in other countries, bankruptcy proceedings in Ireland can be both costly and lengthy affairs.

Mareva Injunction: With good intelligence, a creditor may apply to the court for a Mareva Injunction, which freezes the debtor's assets before the application for judgment. The creditor must prove that there is a clear danger that the debtor will attempt to dissipate assets, or act in such a way as to defeat any future judgment. If successful, the order handed down can relate to specific assets, or be of a more general nature, in that it might prohibit the debtor from reducing their assets below a certain level.

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Mason Hayes+Curran is a full service Irish law firm carefully aligned with serving the needs of its Irish and international clients. Their debt recovery unit is one of the largest and most successful debt recovery practices in Ireland and acts for a large cross section of Irish and overseas businesses.

This information is provided by one of the many reputable and experienced attorney firms utilized by ABC-Amega Inc. in international legal collections of past due debt. For information about ABC-Amega's commercial debt collection solutions, contact info@abc-amega.com.