Law & Regulation
Debt Collection – The Legal System
By Declan Flood, Founder and Chief Executive of Irish Credit Management Training
Feb 17, 2015 - 1:59:33 PM

In Ireland we have an excellent system for collecting debts and like everything else it works when it is used correctly. There are many misconceptions and some practices that should be improved. The whole system could be improved and in particular the use of the small claims court for debt collection and the ability of individuals and companies to handle the paperwork for all undefended judgments without the need for a legal firm to get involved in what is mainly an administrative process would be good for starters. For the purpose of this article we will concentrate on the system we have and how it works from start to finish. Forgive me if you know most of this stuff already I am writing for the benefit of the person who has little or no knowledge of the current system.

If you have done everything in your power to collect a debt, if there is no reason you are aware of why the amount hasn’t been paid, or sometimes when there is, if the customer is not engaging with you in a meaningful way, i.e. making payment, there are times you have to make a hard decision whether to go down the legal route or to simply write the debt off completely.

As simple as this choice may seem, there are times when it is cheaper and easier to write the balance off, particularly in cases where the other party simply has no way to pay the amount in question. Once you have established that the money is due and owing, you know the exact legal entity you are trading with, ideally you have the necessary back up documentation, including copy invoices, signed dockets and a record of all the activity that took place since the account became overdue and you are satisfied that there are sufficient funds available to pay the amount in full, including interest and fees and that the relationship is beyond repair and you have no intention of doing business with them again, then the sooner you issue proceedings the better.

The court you sue in is determined by the amount outstanding, The District Court hears cases up to €15,000, The Circuit Court up to €75,000 and there is no limit in the High Court.

Each court has its own rules and vagaries and I have lots of information on the specific processes if you want to find out more, just let me know. There are also some common ground: If you are successful each court will issue a Judgment, this is simply a piece of paper that says the court accepts that the debt is due and owing, it is worthless unless you do something with it. Your options include:

1. Register the Judgment for publication – it will appear in Stubbs and be on the public record, and as a result will have a negative impact on their credit rating.
2. Lodge with the local Sheriff, who has power to seize goods to the value of the Judgment
3. Register the Judgment as a charge against property owned by the company or individual. You can then enforce your mortgage through the sale of the property in question. The reality right now is that no judge would enforce the sale of a family home for the settlement of a debt.
4. In the case of an individual you can get an Instalment Order, which if it isn’t honoured can lead to committal to prison. It is important to understand that the Instalment Order is an Order of the Court, if the person fails to pay the instalments in accordance with the Order, they are in contempt of court. This is why they go to jail – not for the debt itself.

There are many other remedies, one final point if you are dealing with another business you are entitled to add on Late Payment interest and Admin charges to the account before you take proceedings and the amount should be included in the amount claimed, you are entitled to court interest of 8% on all amounts due from the date of the judgment. Hope this helps your understanding and make sure you get details of what it is going to cost you before you engage any legal firm.

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Declan Flood
Chief Executive
Irish Credit Management Training
121 Lower Baggot Street
Dublin 2

E:  declan@icmt.ie
W: www.icmt.ie
M: 087 2447052
P:  01 659 9466
F:  01 659 9401

Declan Flood FIICM, Founder and Chief Executive of Irish Credit Management Training is a, renowned trainer, international speaker and author with over 20 years hands on experience in Credit Control and Credit Management with major Irish & International Companies.

He is a graduate of the IICM Education program and a Qualified Business Coach. He received his Qualification in Training & Development from National University of Ireland. He has been training in all aspects of credit management for many years, generating a sense of enthusiasm and urgency that has been experienced by all who have been through the training experience.