Key Post Court procedure for debt cases

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Key post: Court procedure for debt cases

Going to court for anything is a daunting experience for many. In this recession many people are being taken to court by their creditors to secure judgements to make them pay up. As legal aid is not available to people involved in debt case and the cost of a solicitor being prohibitive to a person on limited means this guide seeks to explain the legal processes involved.

Normally the creditor’s solicitors will write and warn the debtor of intended legal action to recover a debt, normally giving the debtor seven days to pay or come to a satisfactory arrangement to pay. Failing this the creditor will then issue legal papers to seek judgement.

The Courts

Which court that is used depends on the amount of money involved. For amounts up to €6350 the district court is used. For amounts between €6350 and €38100 the circuit court is used and for amounts over €38100 the high court is used. Each court has its own procedures which we shall explore next.

District Court procedure
Where a person is summonsed to the District Court for a debt of €6350 or less the first document received is a civil summons. This document lays out the details of the debt and who it is owed to. It will also tell you when are where the case will be held. With the form you will be given 3 options:

  • Pay the debt with costs as stated on the summons.
  • Dispute the matter. This means the court will decide.
  • Sign a consent form with the plaintiffs solicitor to be given time to pay

There are 2 forms enclosed which indicate that you wish to defend the case. These must be sent to the court and the creditors solicitors within 7 days of the court. If the case is defended the case will normally be adjourned to another date for trial.

The judge will then decide the case and either dismiss the case if you don’t owe the money or grant a judgement where it is found you do owe the money or the case has not been defended.

It should be noted there is no point in defending a case unless you do not owe the money. Defending where you really do owe the money is a waste of time and money as it will increase the legal costs which are added to the debt. This applies to all debt cases in all courts.
Where you do owe the money it is best to allow the creditor obtain judgement by consent which will minimise the legal costs and means you won’t have to attend court.



Circuit Court procedures

For a circuit court case you will receive a civil bill by registered post. Like the civil summons in the district court this will explain the amount owed and who is claiming it. Unlike in the district court no court date is mentioned. The civil bill orders you to enter an appearance i.e. acknowledgement of service of the document with 10 days and enter a defence with 10 days of the appearance. If you fail to do so judgement will be obtained by default. Where an appearance and defence have been entered the creditor’s solicitors can issue a motion to ask the county registrar to deal with the case. You will be advised of the hearing date.

If you really do owe the money there is no point entering an appearance or a defence as the legal costs incurred with a hearing in the circuit court are substantial and will be added to the debt when judgement is granted.

High Court procedure

In High Court cases you will receive a document called a plenary summons. This is a notice that a case against you has been registered in the High Court. You have to file an appearance if you wish to contest the case. In the High Court, when an Appearance is lodged a Motion must be brought before the Master of the High Court for liberty to enter final judgement. As with the circuit court if there is no valid defence there is no point contesting as the costs in the high court will add thousands to the debt.

If you feel you have a valid defence to any debt case a solicitor should be consulted.


Enforcement of Court Judgements

Judgements are enforced the same way regardless of which type of court that has granted the original judgement. There are a number of methods used. A creditor can use all or any of these methods.

1. The sheriff.
The Sheriff is a Court Officer entitled to seize goods from the debtor which may then be sold to realise funds for the discharge of the debt. In the case of private persons the sheriff will be very unlikely to take any items from a private home. Also cars on hire purchase etc cannot be seized. Where nothing is seized the sheriff will advise the creditor that there is nothing of value to seize.

2. Judgement Mortgage.
When a judgement 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 judgement 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 judgement.

3. Application for an instalment order
Typically this is the most common method of enforcing court judgements. The debtor is sent a summons to attend for examination of his means in court. The debtor must 7 days prior to the court send both the court and the creditor a statement of means. At court the judge may ask questions and will then decide what you can afford to pay if anything.


4. Committal to prison
Failing to comply with the instalment order will lead to the creditor asking the court to send the debtor to prison for a period of up to 90 days. If you cannot pay you will not be sent to prison. This is the only stage of the process where a debtor is entitled to free legal aid.
 
Frequently Asked Questions

Q. What do I do, if I dispute the amount, but I accept that I do owe something?
A. If the amount is disputed you will have to file a defence and put the creditor on notice as to the correct amount. The creditor is then free to amend the summons and proceed as before. They they do not agree to the correct amount the judge will decide the case.



Q. What can I do if the judge makes an instalment order against me which I cannot afford?
A. In that case you can ask the court to review the order. This is done by issuing a variation summons. This is served on the creditor. You will then explain to the judge the reasons why you cannot afford the order and the judge will then decide whether to vary the order to a lesser amount or to leave it the same.
 
Also cars on finance etc cannot be seized.
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Just to be clear here, a car which is subject to HP is owned by the HP company and cannot be seized by the sheriff. However, a car financed by an ordinary loan can be seized.
 
Time great post but your wrong to tell people not to defend the case or even to turn up,even if they owe the debt as it will incur more costs. in my experience if the creditors solicitor does not turn up, as frequently happens, the judge will strike it out.
 

Yes those particular proceedings will be struck out but there is nothing stopping the solicitors reissuing fresh proceedings and getting the judgment that way. In my experience, it would be silly for AAM to advise someone to enter a notice of intention to defend on the sole hope that the other side will not turn up.

By the way, it should also be noted that inability to pay is not a defence. And a notice of intention to defend should not be lodged on this basis or for an opportunity to explain to the court how and why you have fallen on hard times. The Judge is only interested in whether the money is properly owing by the defendant, if it is then Judgment and costs will be have to be granted against him/her.
 
+1

Time, thank you very much for taking the time out to explain all those procedures. Its very much appreciated.

I've spoken to numerous people in the banks who insist they are not taking people to court who engage with them and pay something off their loan each month. The only people who they are taking to court is people who are refusing to correspond with them or paying nothing at all.

Is this really the case?

Thanks again.
 
Nope.

I was talking to a court clerk the other day and she informs me that the courts are inundated with banks seeking judgements. They are wanting to secure their judgements against property.
 
Time, re your 2nd-last posting here - that the courts are inundated with cases where the banks are seeking judgments against property:

Where there is no property to obtain a judgment on, how likely do you think it is that they may NOT take the debtor to court, especially if the debtor is working through MABS (given that if the debtor is genuinely unable to pay more than a token amount for the foreseeable future, one assumes the judge is highly unlikely to make a judgment for a higher amount)? I am hoping that their judgment call (pardon the unintentional pun!) would be that such a process would be a waste of their money as well as of the courts' time.
 
Try telling the banks that.

I was working with a gentleman who hit on hard times and owed a few thousand to a certain bank. He owns nothing except the clothes on his back and a 15 year old car. Being a social welfare receiver he could not pay them more than a token amount each week. I wrote him letters on his behalf to the bank setting out the full situation. The bank rejected every approach and then issued a civil bill to get judgement. They then sent the sheriff on a fools errand to seize nothing and dragged the poor chap into the district court for an instalment order which was refused by the judge. All the while the bank kept adding costs. All the time the bank was told again and again that there was no money.
 
Thank you for the quick reply. That story made my heart sink (poor man). I had hoped that common-sense would prevail, but clearly not.

What happens when a judge refuses to make an instalment order? Does the debtor continue the token payments, and does the bank continue to pursue him till circumstances (hopefully) change? Do they ever make a new application for an instalment order at a later stage, or do they sometimes give up and write off the debt (one reads of write-offs but perhaps more often in the UK)? If a bank proceeds in the way you describe, adding legal costs to the debt, it would be impossible for many people ever to get out of the mire.
 
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Presume there are broader issues with having a judgement registered against you i.e. credit record and ability to get a loan or suchlike again??
 
Indeed, but strictly speaking it is unnecessary as the banks are all members of the ICB.

The main reason for getting a judgement is that it gives legal recognition to the debt and allows the creditor use the apparatus of the state to collect.
 
thanks Time - great post which explained nearly all i was looking for.

Is the attendance at court to explain means open to the public - I have to attend re a debt I do not dispute. I am trying to get a new business going and am worried an appearance in the local paper would have negative impact?

Thanks
 
Thanks Time - do you mind if I ask what to expect at the hearing? who'll be there, what will I be asked. To be honest I am quite nervous about it as have never been in this position or in any kind of trouble before?
 
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Yes, people here have been very good in offering advice to our situation.

We received the first of many I assume a letter from Fitzpatrick & Co Solicitors yesterday, advising my husband to pay the sum of 7,439.04 within the next 7 days or legal proceedings will be necessary. My husband phoned them and explained the situation and the gentleman advised that proceedings will be in the next 2-3 weeks with Circuit Court in approx a years time. He thanked my husband for being so upfront about the situation.
I have been reading Time's post on Court Procedures and I just have a question, if someone could answer it for me please?
Time advises, from what I understand to not defend the case. Does this mean that my husband should go to the court or is it pointless as he does owe the money? I just thought that judges wanted people to state why they have not been able to pay their debts or am I misreading the media? From reading Time's post, I get the idea that if my husband were to take part in any of the proceedings (just to even say why he cannot pay these debts) that it is pointless as costs accrue further? I'm just afraid that if he cannot say why he cannot pay the debts that the judge will make a judgement that he cannot afford and then we will be back to square one.

I have sent letters in to all the relevant departments to BOI regarding his situation and only solution. I have already told them the solution already, but obviously it has fallen on deaf ears and for some reason they seem to think that he has money when he hasn't.

Thanks again for the advice, knowledge and help.

Coleman
 

Many thanks to Brendan for alerting me to this post.

The media are confused by the whole process to be honest.

Court cases for debts have 2 distinct phases:
1.) Obtaining a judgment and
2.) Enforcement of the judgment.

At stage 1 the court is only concerned that the person owes the money in the first place. As stated previously defending a case where the debt is real and the money is owed is pointless and a waste of time. The judge does not care at this stage that the debtor cannot pay, he is only there to decide if the debt is owed or not. Attending the case at this stage is pointless as it will not stop a judgment being made.

Stage 2 is where the court decides what can be paid or not. This is the stage where the debtor must attend court and engage the process. The court will look at the debtors means and make a decision as to what can be paid to the creditor each week/month. At this stage you must be upfront with everyone.

I hope this clarifies the situation.
 
Attending the case at this stage is pointless as it will not stop a judgment being made.
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Time

Thanks for clarifying that. I certainly hadn't realised that.

Is there any way for the debtor to minimise their costs by agreeing to the judgment? I would just be worried that the judge might defer the case and run up the costs of another day's hearings?

Brendan
 
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