Debt Collection

We live in a time where there is a lot of concern about debt be it personal debt or business related debt. There is no doubt that creditors are increasingly seeking to have their day in Court to obtain Judgment against their debtors. Debts can vary from a sum as low as one thousand euro to millions of euro depending on whether it is a personal debt or a business related debt.
It is a legal requirement where a creditor wishes to commence legal proceedings against a debtor that the creditor must put the debtor on written notice that if the debt is not paid within a period, usually seven days, a formal legal claim will be issued by the Courts and served on him or her.
Once the seven day notice period has elapsed and no communication has been received from the debtor the creditor is free to commence legal proceedings. The issuing and serving of proceedings will ultimately lead to the obtaining of a Court Judgment against the creditor.
In legal circles, 2009 will be remembered for one of the more publicised cases in debt collection when Caroline McCann brought an action for judicial review of a Committal Order made against her. A Committal Order is effectively an Order of the Court that a debtor is to be jailed for their failure to comply with an Instalment Order, i.e. a court Order ordering the debtor to pay off the debt by instalments. Caroline McCann had been a member of Monaghan Credit Union. She borrowed money from the Credit Union which she was unable to repay. The Credit Union obtained Judgment and a subsequent Committal Order against her. She challenged the Committal Order on the basis that it interfered with her right to fair procedures and her right to liberty. Caroline McCann had not attended the Committal Hearing and it was her contention that the law relating to Committal was unconstitutional in that somebody could be committed to prison even in their absence. In July of 2009, the High Court found in favour of Caroline McCann. However, the Government moved quickly in response to the Court decision and introduced new legislation, the Enforcement of Court Orders Amendment Act, 2009, for the jailing of an individual where they have failed to comply with an Instalment Order. However, the new legislation does allow for mediation or the postponement of a prison sentence where the debtor is effectively proposing to deal with the debt in some way. Therefore, although a debtor can still be jailed for failure to pay a debt the process does not allow for immediate imprisonment. However, interestingly if somebody fails to show up in Court for a Court Hearing under the new legislation a Judge can order the arrest and imprisonment of the individual immediately.
Creditors will use this legislation in the future as the threat of imprisonment is normally enough to compel debtors to put forward reasonable proposals for dealing with the debt. It is fair to say that Banks and creditors generally are reluctant to use imprisonment as a means of debt collection but times have changed and continue to change and the collection of all outstanding monies due and owing to a person or a business is a vital part of continuing in business for the future.