INTRODUCTION TO LEGAL DEBT RECOVERY
Wales & Co is a leading firm in the area of debt recovery & Insolvency in Ireland. The breadth of our experience serving the needs of corporate and commercial sector means we fully understand the importance of debt recover in today’s business environment. Over the years we have developed an efficient, cost effective approach to Debt Recovery that consistently delivers exceptional results. Our approach is to treat each case individually so that we can apply the most effective legal procedures to that case to maximise collection.
What is debt and what is debt recovery?
From a legal point of view a debt is a legal obligation to discharge a value, capable of arithmetic calculation, owing to another party (ies). Such obligations to pay over to others may arise as a result of a contractual involvement (like for instance, receiving goods which ought to be paid for in return). Alternatively, statue based debts come in the form of Taxes, levies, and so on. Thirdly, debts may also arise as a result of Court orders, which impose a monetary liability. The failure to discharge the sums due is where the debt recovery process becomes important.
Incepting a file is the phrase we use for setting a new file up on our specialised system.
Forms will be provided for details and if required a new Client form will also be provided. Both of these need to be completed with full details and status of both the Client details and the debtors details. These can be emailed to email@example.com.
When a new case is received all information is contained on the forms provided. The information will include the following:
1. Full name of Defendant
2. Full address of Defendant
3. Balance clearly stated, including only claimable charges and possible interest due
4. Occupation of Defendant
5. Debt in respect….e.g. goods sold and delivered.
INCEPTION OF FILES
Once we have all the relevant and correct details we can then proceed to incept the files onto our system.
An initial letter of demand has two primary functions; (i) It serves to alert the Defendant that the monies they owe are now being pursued through the legal system; (ii) It also acts as a letter of demand for those monies and a final notice prior to commencement of legal action. One of the key features is that it sets down a limit of seven days for payment, failing which the Debtor/Defendant is on notice that action for recovery through the legal process will commence.
On expiration of the seven-day letter presuming no payment is received, the process of commencing legal action begins.
LEGAL DEBT RECOVERY PROCESS
(1) Pre-Judgment (2) Obtaining Judgment (3) Enforcement of Judgment
Before commencing the legal process in a debt recovery case, the client must have the following information:
• The clients own legal status and full registered name
• The debtor’s legal status – (a) Limited company (2) Sole Trader (3) Partnership
• The correct address – business address/registered office
• The exact amount of debt (in euro)
• The basis of claim
Creditors Legal Status
The correct legal title for both client and debtor must appear on all legal proceedings
If a debt is owed to an individual then legal proceedings must be in that individual’s name, both the Christian and Surnames are required.
Debtors Legal Status
When seeking to recover a debt, time must be taken to identify the legal title of the debtor in the case of a Company it is necessary to know if you are using ABC Limited or ABC (Ireland) Limited? In the case of a Sole Trader it is important to identify the Trading name, i.e. Joe Blogs Trading as XYZ shoes.
Basis of Claim
Debts arise from non-payment for goods sold delivered or services rendered. Other debts arise due to cheque payments which have failed to clear through bank account, or on foot of arrears of rent or service charges on property. In some cases it may be due to personal loans or arrears on outstanding bills.
Creditors at some stage or other may find themselves having to issue legal proceedings to recovery outstanding debts.
There are three Court jurisdictions and the amount of debt will determine which Court proceedings will be issued in.
|District Court||up to||€15,000.00|
Demand Letter (LBA)
We will issue a demand letter to advise the debtor that unless the debt is discharged within seven days that legal proceedings will be issues against them and that this may result in a Judgment against them. It also warns that further costs will be claimed if legal action becomes necessary.
Legal Process – Obtaining Judgment
The procedure for obtaining Judgment depends on whether or not the case is defended. If the debtor discharges the debt at any stage of the legal proceedings then legal proceedings can be stopped.
When the debtor fails to discharge the debt then the Court will grant a Judgment in favour of the creditor. A Judgment 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.
Issuing and Serving of a Court Summons
If a debtor fails to discharge the debt within the time allowed, Court proceedings are issued and served. It is vital to maintain momentum and to ensure that the debtor knows how serious the matter is. Great importance is attached to issuing the proceedings immediately after the initial demand if the debt is not discharged.
Issuing Court proceedings is the process whereby the appropriate endorsement of claim is drafted; the summons is stamped with the required stamp duty and is then submitted to the relevant Court office for the allocation of a records number.
Once this is done the proceedings are then returned to the Solicitors office and subsequently served on the debtor. In the case of a Limited company it is served by Certified Post.
A Summons is served in the District and Circuit Court by registered post. High Court cases, the Summons must be served personally.
The different Court levels require the following Court proceedings:
|District Court||Claim Form|
|Circuit Court||Civil Bill|
|High Court||Summary Summons|
Affidavit of Debt
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 earlier possible date allowed by the Court rules and states the amount of debt due. The Affidavit must be signed by the Creditor and sworn by Commissioner of Oaths. It must be then lodged along with other documents in the relevant Court office in order to obtain a Judgment.
In each case a Judgment set is lodged with 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.
Each debtor has the right to defend a claim against them.
A 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 delay tactic, but on the other hand it may be a genuine confirmation of his intention to proceed to a full defended hearing. A debtor needs to notify his/her intention to defend on receipt of the Summons within a specified time period.
When the debtor receives a Summons claiming a debt, he may notify his intention to defend proceedings in the District Court by serving the creditor’s solicitors with a defence.
This notice will enable the parties to have the matter set down for a Trial Date. On the hearing date itself, both parties will be required to attend Court and give evidence. The Plaintiff must prove his case.
Example of proofs required would be signed Order Forms, Invoice or Delivery Dockets. It is imperative that the creditor consults closely with the Solicitor prior to the Court hearing.
Circuit Court – Debts of €15,000.00 to €45,000.00
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 of 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 €45,000.00
If a debtor intends to defend a High Court case, his/her Solicitor will enter an Appearance. An Affidavit together with a Notice of Motion seeking Judgment is filed in the High Court Office setting out the Claimants claim and a date is given for a hearing before the Master of the High Court.
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.
However, if the Master is satisfied that the defendant has a genuine dispute he will send the matter for a Plenary Hearing.
In a High Court action for a liquidated debt, a full or complete hearing on the merits of a case subsequent to the issue and service of Summary Summons is known as a Plenary Hearing. This hearing usually follows a direction from the Master’s Court that the case be heard by way of a Plenary Hearing. Hearings of this kind do not involve a jury but are heard before a Judge of the High Court after a full Pleading has been filed.
What is Substituted Service?
If any documents are served by registered post and are returned by the Post Office then it cannot be said that service was successful as the debtor has not signed for it. Therefore, we cannot proceed any further. However, we can apply to the Court to have a different form of service deemed food. This will usually be service by certified post, however, in some District Courts the Judge my order that the documents served by personal service or personal service by a member of An Garda Siochana. Once a trace is conducted by a Tracing agent and confirmation is given that it is the correct address for the debtor and once we can prove this to the Court then we are allowed service by ordinary post which is known as Substituted Service.
In the case where a Creditor may not be sure if the debtor resides at the giving address then a Tracing Agent is instructed from the office to confirm or deny whether a Debtor is at the address. Your legal executive will ensure that all information possible is given to the tracing agent to assist in a positive result being returned.
On receipt of confirmed from the tracing agent on his/hers headed papers and once an order for substituted service is granted by the Court it is attached to the original document and a copy and then served on the debtor.
Once posted it is deemed that the Summons is served. The legal process will then resume as normal.
Enforcements are dealt with by the Legal Executive in the office. The main types of enforcement procedures will depend on a number of conditions. (1) Amount of debt (2) if the debtor is a Limited Company or Sole Trader. The enforcement options are as follows;
2. Examination – (Sole Trader only)
5. Judgment Mortgage
7. Winding Up Petition
Once a Judgment is obtained it can be then lodged in the appropriate Sheriff’s office. The Sheriff will issue a four day demand letter to the debtor prior to calling out to the premises/individual.
The Sheriff can then seize goods to the value of the debt; alternatively, he may enter into a payment plan and will return on a monthly basis to seek payment as arranged. It may be worth noting that any information on goods/retention of title of goods may be forwarded to Sheriff. For example registration number of vehicle etc.
An examination hearing is where the Defendant is summonsed to Court where the Judge will assess their financial means and usually order the defendant to discharge the amount by instalment on a Weekly or Monthly basis. This order is called an instalment order and is drawn up after an order is made. The defendant will be required to lodge a financial statement of means with the Court. It is important that a Creditor provides any extra information he/she may have on the financial circumstances of the debtor. This will allow for the largest possible instalment to be granted.
A Committal order is granted by the Court when a debtor defaults on their instalment order or fails to comply with the order.
Publication is the process whereby a Judgment obtained is registered in the High Court Central Office. Once publication ensures it can appear in any trade Gazette such as Stubbs Gazette, ITPA Gazette, National Newspapers and Credit Magazine.
The records in the Central Office are also used when checking a person’s credit worthiness and this will affect the Defendant if he/she is applying for credit from a financial institution.
The Judgment Mortgage registers the debt as a charge (mortgage) on the debtor’s property. The defendant cannot dispose of the property without having the Mortgage discharged. If he does the charge will follow the property and not the person. A Judgment Mortgage between private parties lasts 12 years.
*Once Judgment is obtained on a file and giving the debt amount we will advise you as to which is the best option of Enforcement.
Bankruptcy action commences with service on the debtor by way of a Statutory Demand. If there is no response to the Statutory Demand the next stage is to issue a Bankruptcy Summons and Bankruptcy Petition.
WINDING-UP / LIQUIDATION (COMPANY)
A Section 214a Notice (a Statutory Demand) is served on the debtor and the Defendant has 21 days within which to reply to the Notice and failing a satisfactory reply, the Plaintiff may proceed in instructing their solicitor to the next stage of preparing and issuing a Petition to Wind Up the Company.
A date for the Winding Up Petition is allocated by the Court.
It is required by law that the Notice to wind up the company must be advertised in two national newspapers and a Government publication.
A Liquidator is then appointed by the High Court.
*Warning – This procedure can be highly effective in recovering your money.