Court proceedings for recovering debts
Court proceedings for recovering debt
Most court proceedings in relation to debt are civil proceedings. You may be eligible for civil legal aid if you pass the means test and if your case is likely to succeed. If you accept that you owe the debt and that you have no defence to the claim, then your case is unlikely to succeed and you would not get civil legal aid.
If a judgment order is made against you, you are usually liable for the costs incurred by your creditor in taking the case. These costs are added to the amount of the judgment and can be enforced against you as part of the enforcement of the judgment.
Criminal legal aid
If you fail to pay an instalment order and you are summonsed to court for committal proceedings, you are eligible for criminal legal aid. The decision on whether or not you get such aid is made by the judge dealing with the committal proceedings.
Court procedures for judgment
If you fail to pay a debt, your creditor is likely to go to court in order to get a court judgment that you owe the debt and then enforce that judgment.
- If you owe less than €15,000, the court proceedings must be brought in the District Court; proceedings are started when the creditor issues you with a claim notice; the procedure is governed by the District Court Rules.
- If you owe between €15,000 and €75,000, the court proceedings must be brought in the Circuit Court; proceedings are started when the creditor serves you with an Ordinary Civil Bill; the procedure is governed by the Rules of the Circuit Court.
- If you owe more than €75,000, the court proceedings must be brought in the High Court; proceedings are started when you are served with a Summary Summons by the creditor; the procedure is governed by the Rules of the Superior Courts.
The procedures and the documents which are used are different depending on which court is involved and sometimes on which kind of debt is involved. The proceedings are started by the person to whom you owe money. That person (or group of people or company) is the creditor and the claimant or plaintiff in the case. You are the debtor and the respondent or defendant in the case.
In general, you are served with documents that set out the details of what you owe. You then have an opportunity to defend the action – this means that you must issue a replying document arguing that you do not owe the money, or that the contract is not valid, or whatever legal defence is open to you. If you do not do anything, then there is little doubt that judgment will be awarded against you.
In general, if you are served with a document starting legal proceedings, you have 3 options:
- You usually have a number of days in which to pay the debt and the proceedings then do not start. The legal term is that the proceedings are stayed.
- If you cannot pay what is owed and you have no defence, you may consent to an order being made.
- If you intend to defend the action, you must serve the necessary replying documents. Then a date is usually set for a hearing and the matter is decided at the hearing.
If the matter in issue is covered by consumer credit legislation, then the person to whom you owe the money (the creditor) must issue a notice to you at least 10 days before taking legal action. This notice must outline:
- Details of the agreement
- The name and address of the creditor or owner
- Your name and address
- The term of the agreement to be enforced and
- A statement of the action the creditor intends to take to enforce the agreement, the manner and circumstances in which he/she intends to take this action and the date on or after which such action will be taken.
If the consumer credit legislation does not apply, then it is the usual practice for creditors to send a seven-day demand letter to you before starting legal proceedings. This, however, is not a legal requirement.
You, as the debtor, are generally liable for the costs of the court action.
District Court procedure
The procedural rules are set out in the District Court Rules. In general, the legal proceedings must be started in the District Court area in which you live or in which the contract was made. However, if the contract comes within the Consumer Credit Act 1995, the proceedings may be brought only in the District Court area in which you live.
District Court proceedings are started when the creditor issues a claim notice to you. This notice states the creditor’s claim, for example, that you owe him €5,000 for goods bought on a specific date.
The notice gives you 2 options:
- If you pay the amount claimed within 10 days of the service of the claim notice, you will not have to go to court
- If you intend to dispute the claim, you must notify the claimant of your intention to do so within 28 days of receiving the notice; you use an appearance and defence form to do this
The claim notice may be served on you in person at your home or by registered post. If it is not possible to serve the notice in one of these ways, the creditor may ask the District Court to allow substituted service – this means that it may be served in some other way, for example, by ordinary post. If this does not succeed, for example, because the creditor does not know your current address, the creditor may ask the court to deem the notice to have been properly served.
The creditor must then provide proof of service either by oral evidence to the court or by a statutory declaration of service. Any such documents must be lodged with the District Court clerk at least 4 days before the court hearing.
If you do not indicate your intention to defend the proceedings, there is no hearing and the creditor gets a judgment that you owe the money. The creditor files with the District Court Clerk:
- An affidavit or statutory declaration of service of the claim notice
- A certificate of no appearance/defence
- An affidavit of debt verifying the creditor’s claim
- A District Court decree
There are different forms of affidavit depending on the kind of debt involved. These documents constitute the District Court judgment set. These are then checked and, if all documents are in order, the judge of the District Court issues the judgment. The judgment is for the amount owed plus the costs involved in the proceedings.
Having obtained the judgment, the creditor is then entitled to enforce the judgment. Interest at the rate of 2% begins to run on the amount of the judgment (but not the costs) from the day the judgment is given. This interest rate was reduced from 8% by the Courts Act 1981 (Interest on Judgment Debts) Order 2016, which came into effect on 1 January 2017.
If you defend the proceedings
If you are defending the proceedings and have sent your form indicating your intention to defend, then the creditor serves a notice of trial on you at least 10 days before the court hearing. At the hearing, the judge hears the arguments from the creditor and from you and makes a decision. That could be to make a judgment in favour of the creditor or to dismiss the action. If the judge considers that you cannot pay the amount through no fault of yours, the judge may grant a stay of execution for a period of time. The judge may make an order for payment by instalments.
If you do not defend the proceedings, there is no hearing so it is highly unlikely that a stay of execution or payment by instalments will be granted.
Circuit Court procedure
The procedure is broadly similar to that which applies in the District Court but there are some differences in the documents which are used. The rules are set out in the Circuit Court rules.
The proceedings start with the creditor serving an ordinary civil bill on you. This is broadly similar to the claim notice used in the District Court. The claim being made by the creditor is set out in the indorsement of claim. This must set out the details such as the date and the content of the contract.
The civil bill states that, if you want to defend the case, you must enter an appearance within 10 days. This period can be extended by agreement or by direction of the court. Entering an appearance means that you must lodge a specified form with the County Registrar and give a copy to the creditor or his solicitor. The County Registrar organises the business of the Circuit Court and has a broadly similar role to that of the Clerk of the District Court.
If you do not propose to defend the action, you may consent to the claim in the same way as in the District Court.
If you do not enter an appearance or if you enter an appearance and then do not deliver a defence, the creditor may apply to the court for a judgment in default of appearance. This judgment is given if the relevant documents are lodged by the creditor. It seems that some County Registrars require that the creditor give you 14 days' warning notice of such an application but this is not a legal requirement. The judgment is for the amount owed plus costs.
Once the judgment has been granted, the creditor may then apply for an execution order in order to enforce the judgment.
High Court procedure
Proceedings in the High Court are started by means of a summary summons. In general, this must be served in person unless that is not reasonably practical. There are provisions for substituted service which are broadly similar to those in the District Court. The summary summons must include an indorsement of claim. This sets out the amount which the creditor claims is owed plus costs. It also states that, if you pay within 6 days, the proceedings will not go ahead (the proceedings are stayed). If the creditor is a licensed moneylender, this fact must be stated in the indorsement of claim; other details about the loan agreement must also be stated, such as the applicable rate of interest.
You have 3 options:
- You may pay the amount owed plus costs within 6 days and the proceedings will not go ahead
- You consent to judgment and ask for further time for payment
- You may defend the proceedings by entering an appearance. You do this by delivering a memorandum in writing to the Central Office of the Four Courts, Dublin within 8 days of the service of the summons.
If you do not enter an appearance, the creditor may get judgment in default of appearance from the Central Office of the High Court. In some cases, for example, moneylending agreements, the permission of the Master of the High Court is required before such a judgment can be granted.
If you do enter an appearance and defend the proceedings, then the case is heard by a High Court judge and judgment is given.
Usually, the creditor looks for an order of fieri facias at the same time.
Enforcement of judgments
If the creditor gets a judgment against you, they are entitled to use various mechanisms to get the money from you. Read more in our document on enforcement of judgments.