In many cases a prompt demand letter or a simple repayment plan can be the fastest and cheapest way of resolving the matter. Sometimes legal proceedings are the only option left available to you if non-legal efforts to resolve the matter have been unsuccessful.
Before issuing proceedings you should consider:
- The likelihood of success.
- Whether the matter will be defended.
- The ability of the debtor to pay.
These factors are relevant to both the cost of bringing the proceedings and the length and time it will take to resolve the matter.
The amount of the debt will determine in which court the proceedings are brought. The District Court currently deals with debts of up to €15,000.00, the Circuit Court deals with debts of up to €75,000.00 (other than in personal injury claims where this is limited to €60,000.00) and higher amounts come before the High Court. Debt collection proceedings do not always go to hearing. Once the proceedings are started, if they are not defended (disputed) by the debtor, you can obtain a judgment (a decision from the court) based on an affidavit (i.e. a written account of the debt declared and sworn by the creditor). If the matter is defended by the debtor, then you may have to go to court to give evidence of the debt.
The costs of debt collection proceedings are generally low, unless the matter is defended. The Court will generally instruct that, when the judgement is in your favour, some of your legal costs can be collected with the debt. Interest can also be claimed at the contract rate on the debt. Where the contract does not provide for interest, the Court can apply it at its discretion to any debt. In this case, interest is applied to the judgment debt at the statutory rate, which is currently 2% per annum.
Collecting the Debt
Once a court judgement has been obtained, it needs to be enforced against the debtor. One option is to send the court sheriff to seize goods and sell them to cover the amount of the debt. If you are aware of money due to the debtor from a third party, you can apply to the Court to have this money paid directly to you. It is also possible to determine the ability of the debtor to pay. You summon the debtor to court to give evidence of their income, expenditure, assets and liabilities and the Judge will then fix a periodic payment (weekly or monthly generally) that must be paid by the debtor until the debt is cleared.