- Bill seeks to implement recommendations of 2010 Law Reform Commission Report
- Bill provides access to new District Court procedures to deal with certain debts where debtor “won’t pay”
- Bill includes safeguards to ensure protection of debtors who “can’t pay”
- Bill proposes to abolish imprisonment of debtors
Tuesday 30 June 2015
The Government is today publishing the Civil Debt (Procedures) Bill 2015.
The Bill will implement a number of recommendations of the Law Reform Commission (LRC) in relation to the enforcement of debt. The LRC Report published in 2010 on Personal Debt Management and Debt Enforcement made a number of recommendations for wide scale reform of the existing personal insolvency and debt enforcement regimes. Key elements of that Report were implemented through enactment of the Personal Insolvency Act 2012. The new Bill seeks to implement further recommendations of the Report aimed at enforcement and recovery of debts which could be developed to streamline the existing enforcement procedures.
Under the proposed Civil Debt (Procedures) Bill, a creditor will first have to obtain a judgment debt order from the District Court, as at present, which establishes that there is an enforceable debt. Under present law creditors already have a number of options for recovering the money owed at this point, including a Court instalment order, an order for the seizure of goods by a county sheriff or registration of a judgement against the property of a debtor. This Bill will add to this suite of options with two additional possibilities i.e. an order from the District Court to enforce the debt by means of either attachment of earnings or deductions from social welfare payments, as appropriate. The provisions of the Bill are applicable to debts over €500 and less than €4,000 in value. These new options will be primarily of use to small businesses, tradespeople and the self employed by giving them a new type of access to the Courts to get payment of their debts from those who can afford to pay, but won’t pay. Consumer debts owed to financial institutions or licensed moneylenders and arising from loans are excluded from the scope of the Bill. There are also very specific court based protections for debtors who cannot pay.
Minister Fitzgerald said “Attachment of earnings or deductions from social welfare payments is best suited to the enforcement of debts of this nature over a relatively short period of time. In particular, this enforcement mechanism will benefit small businesses or suppliers in recovering moneys owed to them.”
Referring to these the Minister said: “It is important to note that these are balanced measures they add two new District Court options to the existing suite available to creditors but critically the Court will be obliged to examine the financial circumstances of the debtor before applying the attachment or deduction order procedure.”
These provisions are subject to a number of very important safeguards for the debtor. The intention of the Bill is also to provide for the abolition of imprisonment of debtors except in the case of maintenance arising from family law proceedings.
Minister Fitzgerald said: “This Bill expands the current range of debt enforcement measures by making available to creditors a range of legal mechanisms which compel payment by “won’t pay” debtors who knowingly refuse to pay their obligations. At the same time the intention to abolish imprisonment is an important milestone. ”
As already stated this Bill provides measures primarily to deal with those who can pay their bills but won’t. This would include Irish Water charges among others. Measures specific to compliance with Irish Water charges and provisions for eligibility and payment of the water conservation grant post 2015 are being introduced in the Dáil this week by the Minister for the Environment, Community and Local Government at Report Stage of the Environment (Miscellaneous Provisions) Bill 2015.
Note to Editors
Main provisions of the proposed Civil Debt (Procedures) Bill
Creditors may apply to the Court for an order enabling either
· attachment of earnings or
· deductions from social welfare payments, as appropriate,
for the purpose of enforcement of debts over €500 and less than €4,000 in value. Consumer debts owed to [financial institutions, credit card companies, licensed moneylenders] are excluded from the scope of the Bill.
Under present law the creditor has more limited options including....
· execution against goods (one of the main ways of enforcing a judgment where the order of the court directs the sheriff or County Registrar to seize the debtor's goods and sell them to raise money in repayment of the debt).
· instalment order (mainly used by small creditors such as shops or credit unions also in the enforcement of family maintenance orders where the creditor can secure the attendance of the debtor in the District Court in order to establish their capacity to pay the debt and where the court may then order payment in full or in instalments based on the debtor’s means.)
· judgment mortgage (where the creditor may register a charge against property owned by the debtor. The judgment mortgage must be paid off when the property is sold).
The new options arising from this Bill will be available to appropriate creditors in addition to those already available.
Attachment of earnings would arise where a Court orders the debtor’s employer to deduct specified sums from the debtor’s earnings to pay over to the creditor. Deduction from social welfare payments would arise where the Court orders the Department of Social Protection to deduct specified sums from the debtor’s Social Welfare payments to pay over to the creditor.
However, these provisions would be subject to a number of safeguards such as:-
· The debtor will be offered an opportunity to make representations to the court on his or her behalf before the court may make a decision on the matter.
· Importantly, in making a decision, the Court will be required to take into account the debtor’s capacity to repay the debt in terms of the amount of the attachment or deduction which would be ordered.
· Provision is also made for variation or termination of the order if the debtor’s circumstances change materially.
Importantly, the Bill will also make provision for the abolition of imprisonment of debtors except in the case of maintenance arising from family law proceedings. This will implement one of the key recommendations of the Law Reform Commission in this area.