1.1 Amicable Phase
Collection Agency Service Ireland employs a professional staff whose goal is to facilitate an amicable collections process between our clients and the debtors who owe them money. The goal of our professional staff is always to avoid legal action when dealing with clients in Ireland, as the procedure can be slow and costly to everyone involved. For this reason, our primary focus is on settling the debt in full or instituting an acceptable payment plan. We are heavily involved with our clients during this process, and try to negotiate friendly terms that will aid both our client and the debtor.
Our process begins by issuing an official Letter Before Claim, which initiates the legal process even while the case remains on amicable terms with Collection Agency Service Ireland. This letter is not used in all collection cases, however, as it’s only applicable in those where we need to obtain evidence that the debtor has the ability to pay. We are also able to issue a copy of this letter, and the resulting proceedings, to the court in England and Wales in the event that a debtor fails to make a payment toward their debt as agreed.
In the event of a dispute involving the debt itself, we seek to reach an amicable solution to the problem between the creditor and the debtor. This is typically done by our professional staff, and it involves collecting a wide variety of official and contractual documents. Contracts, invoices, confirmations, orders, and delivery notices are all used to discover and enforce the terms of any contract in an agreeable way to both parties. When an investigation into the debtor’s finances or information is required, we enlist the support of our in-house legal team.
1.1.2 Local agent
Collection Agency Service Ireland currently does not operate a field agent program in Ireland, and in-person visits to debtors are thus not offered as a collection tool or negotiation tactic for our clients.
The interest applied to a late payment due to a creditor is subject to the laws and guidelines set forth in the European Union’s Late Payments in Commercial Transactions Regulations of 2002.
This law applies to each country within the Eurozone, and is designed to eliminate or greatly reduce late payments in financial transactions. As Implemented in Ireland, this law mandates that interest will become payable if the payments for a commercial transaction are not fully satisfied within 30 days from the original due date on the invoice, unless otherwise noted in the contract between the creditor and the debtor. The regulations further state that the interest rate will be the same as that set by the European Central Bank as its main refinancing rate, with an additional seven points added tot hat rate. The European Central Bank’s rates are determined on the first days of January and July, and those rates are considered valid for the ensuing six months of the year.
The rate that applies to late payments is the rate that is currently in effect when the payment becomes at least 30 days past due. As an example, the applicable rate in July of 2011 was 1.25 percent. An additional 7 percent is then added to that figure, making an interest rate of 8.25 percent for late payments and collected debts for the final half of the 2011 calendar year. That translates roughly to a daily interest rate of 0.022 percent on past due payments and collections. Even if the rate falls after the first day of January or July, the rate applied to the debt will not decrease correspondingly.
Solicitors based in Ireland do not automatically charge the interest rate to a past due payment or a collected debt. Those creditors who wish to charge interest on a past due payment must do so in accordance with Irish regulations, typically by including such provisions in a contract. It is the policy of our solicitors to always add this interest rate to the costs associated with collecting a debt unless instructed otherwise by our clients.
1.1.4 Debt collection costs
The creditor is well within their rights to charge all costs associated with debt collection to the debtor as part of the process. This amount is calculated with a special formula within the European Union, and is enforced in Ireland as part of its financial and debt collection regulation scheme. This calculation takes into account the age and size of the debt and adjusts the costs accordingly. Collection Agency Service Ireland will perform this calculation independently and charge the relevant costs to the debtor as part of our amicable collections process.
The term “prescription” is not used in the United Kingdom or Ireland. Instead, the law prefers to use the more traditional Statute of Limitations terminology.
1.1.6 Statute of Limitations 1957
Ireland’s debts are subjected to laws past in 1957 that limit and define permissible collections activity. The Statute of Limitations itself is defined as the amount of time a creditor has to collect a debt after it has become past due. In Ireland, creditors are given a period of six years after the debts date of first delinquency during which time they can expect to collect the debt. After this time, it is no longer permissible or legal to pursue collection of the debt in any form.
1.1.7 Accepted and most common payment methods
The preferred method of payment toward debts in Ireland remains the traditional paper cheque, although debt collectors are increasingly moving toward bank transfers for quicker, more reliable payments. It should be noted that, in some cases, Collection Agency Service Ireland will pursue a long running payment plan on behalf of our clients and, in those cases, will use direct debit of the debtor’s account to secure payment of each installment. There is some resistance to this method on behalf of debtors, however, so this may take a bit longer to negotiate.
1.1.8 Types of companies
Ireland has a number of different company types, and each is subject to its own laws, regulations, and requirements for formation. These requirements are important to know before pursuing collection, as they can potentially foil the best-laid plans of many creditors when seeking payment on an outstanding balance. The types of companies regulated by Irish law include the following:
This is typically an entrepreneurial business and it’s owned by a single individual. The individual named as the sole trader is personally responsible and liable for all debt incurred by the company. However, legal action and collection activity cannot occur until Collection Agency Service Ireland has verified the identity of the sole trader and, in most cases, their date of birth.
This type of business is owned and operated by at least two people who have join liability for the company’s debts. Before pursuing any action against a partnership, Collection Agency Service must be able to verify the personal identities of the partners. Each partner in this type of business is responsible for the company’s full debt and can be pursued for that amount by the legal system.
This type of company is operated by directors, rather than partners. The company can be pursued for their debts, but the individual directors who make up the company cannot be pursued for any amount owed by the limited company itself.
1.1.9 Sources of Information
Limited companies are required by Irish regulations to register with the Companies Registration Office, or CRO. Sole traders and partnerships are not subject to the same requirements.
In the absence of a CRO entry, Collection Agency Service Ireland can use credit reference agencies to found out key information about limited companies. For individuals, this is not the case. We must instead rely on personal online searches and work to verify this information through contact with business associates, business partners, neighbors, and other personal contacts of the debtor’s.
1.2 Retention of Title
Retention of Title laws in Ireland are split into two distinct types:
Simple Retention of Title:
This type of ROT specifies that goods only pass into the buyer’s ownership when the invoice relating to those goods has been fully paid. Otherwise, they are the property of the distributor.
All Monies Retention of Title:
Under this regulation, the title for the goods passes to the buyer only when the buyer has paid for all goods supplied. This mandates that all invoices relating to the distribution be fulfilled before the buyer can take ownership.
Collection Agency Service Ireland is quite familiar with these two ROT types and will work to advise our clients as to which one applies to their situation. It is our goal to pursue Retention of Title in order to redeem goods that have not been paid for in an effort to repay the debt as quickly and as effectively as possible.
1.3 Safeguarding measures
Debtors may sometimes offer a personal guarantee in order to secure the debt owed to the creditor. This must be legally enforceable in order to be used by the creditor when pursuing the debt and holding the debtor responsible.
1.4 Legal Procedures
The legal procedures for collecting a debt in the Republic of Ireland are strikingly similar to those in the United Kingdom, but they can be a bit less efficient and lengthier than the United Kingdom’s system. The length of time it takes to pursue a lawsuit against a debtor in Ireland will depend on whether the debt is secured or unsecured. Typically, unsecured debts proceed more quickly through the system, especially if the creditor has complied with all regulations and obligations set forth by Ireland’s laws and their own contractual obligations. In this case, credit insurance will often contribute to the cost of legal proceedings.
If credit insurance does cover legal costs and the cost of the claim itself, the claim will be pursued by the credit insurance company rather than the original creditor. In this case, the original creditor will still be consulted and informed about the process, but they will not be responsible for directing the legal proceedings associated with the debt. If credit insurance does not cover the claim, then Collection Agency Service Ireland will require the creditor to agree to take legal action in writing prior to launching a lawsuit. The creditor will also be asked to make payments toward the costs associated with legal action.
1.4.2 Legal System
Legal proceedings begin with the issuance of two letters, each of which are designed to seek payment from the debtor in an effort to avoid legal action. Those letters require a response within seven days.
In Ireland, the proper court for handling a debt is decided by the amount of money owed to the creditor:
District Courts handle up to EUR 6,350
Circuit Courts are responsible for handling cases seeking up to EUR 38,093
High Courts hear cases involving debts of more than EUR 38,093
If the debtor does not respond to the two letters offering a last chance to avoid litigation, a solicitor will issue a Civil Bill to the Court to the debtor, which must be personally served. This can take between six and eight weeks, depending on the court’s proximity to the debtor’s home address or business offices. The debtor can then return a Notice of Intention to Defend, which allows solicitors to begin researching the details of the case and building a defense.
The debtor has 21 days to respond to the Bill. If no response is received, an affidavit of debt is issued to the creditor.
The Affidavit of Debt
This required legal document must be signed by an official representative of the creditor who is well versed in the particulars of the debt and the pending legal action. The affidavit is returned to the court by the creditor’s solicitors and a return date is set by the court. That date may be as far as three months from the date that the document is submitted. Solicitors will move to seek a judgment against the debtor at the time of the return date with the judge. Enforcement will begin thereafter.
1.4.3 Required documents
To pursue legal action, Collection Agency Service Ireland requires the following documents from the client:
– Copies of invoices
– Account statements
– Account opening form and contractual agreements
– Delivery notices
– Relevant correspondence between the creditor and debtor regarding payment
1.4.4 Legal dunning procedure
This is not pursued in Ireland.
The costs of legal action in Ireland vary quite a bit depending on the type of procedure necessary and the level of court where the legal action is taking place. No matter the venue or costs, our professionals will meet with our clients to discuss the likely costs of the proceeding as well as the most likely timeframe for its eventual completion.
Some of the costs incurred by a legal proceeding can be charged to the debtor and added to their debt’s overall balance. The decision to charge these costs to the debtor is made by the judge, and typically amounts to between 60 and 70 percent of the total costs incurred by the creditor. Collection Agency Service Ireland offers a fixed rate for pursuing legal action in Ireland, making this amount easy to calculate before pursuing action.
If the case becomes heavily defended, it will need to be transferred to a solicitor. At that time, charges for the case move to an hourly structure. The cost of these hourly charges can range form EUR 150 to EUR 500 per hour, depending on the nature and complexity of the case. No exact estimation will be possible prior to the start of the case, however. For this reason, it is our policy to encourage medication before defended legal action.
1.4.6 Expected timeframe
Pre-legal actions take roughly 14 days after being issued. Legal proceedings take roughly 12 weeks from filing to judgment. Enforcement is limited by scarce sheriff coverage in Ireland and this can cause enforcement to take up to a year.
1.4.7 Interests and costs in the legal phase
Debt continues to incur statutory interest and costs during legal action.
1.5.1 Enforcement in debt
A judgment is not necessarily an indicator of successful collection. Indeed, many clients refuse to pay. In the event of non-payment, an enforcement officer will visit the debtor in person in an attempt to collect the balance owed. Normally, this involves collection by the sheriff. The judgment itself is published in Stubbs, a national publication that is widely available and contains details of all judgments issued to debtors nationally.
1.5.2 Enforcement in movable goods
If the debtor does not satisfy the debt or make payment arrangements, the sheriff can seize any goods relating to the business and use those goods toward the payment of the debt through a notification of seizure. This is followed by the seizure of the goods themselves by the sheriff. The sheriff liquidates goods and the funds resulting from that liquidation are deducted from the balance due.
1.5.3 Enforcement in immovable goods
Debtors who own property can be subject to a Judgment Mortgage. This requires the judgment to be paid before a property can be sold. Multiple judgment mortgages can be filed against the same property, so this may not be the clearest path toward success.
1.6 Insolvency Proceedings
Insolvency in Ireland is quite varied, and can include a voluntary offering of a payout to creditors. It can also involve liquidation, bankruptcy, and other proceedings. In the case of insolvency proceedings, Collection Agency Service Ireland will advise our clients on a case-by-case basis.
Once we have discovered that a debtor is insolvent, we will advise our client as to whether or not they have any hope of recovering any sort of payment from the debtor. If we determine that some dividend can be ascertained through an insolvency proceeding, we’ll monitor the debtor’s legal actions and file for such a dividend when appropriate within the insolvency action.
Examinership is actively used in Ireland, and involves a liquidator or examiner running through the company’s finances and offering proposals to creditors for some sort of payment. These proposals, once considered by creditors, must be submitted to a judge for approval. If the judge agrees, the court issues a statement agreeing to the conditions and details the payable dividend that can be applied to outstanding debts with creditors.
1.6.2 Required documents
To lodge a claim, we require the following documents to be submitted:
– Copies of invoices
– Copies of orders, delivery notices, and confirmations
– Copies of conditions of sales, if relevant
1.6.3 Expected timeframe and outcome
Claims are typically lodged within six months. After that time, clients will be directly contacted during the first instance. Insolvency proceedings from that time can last up to five years.