The Civil Debt (Procedures) Act 2015 (the “Act”) has implemented recommendations from the Law Reform Commission in relation to the enforcement of debt and also seeks to streamline the existing enforcement procedures.
Under the Act, creditors may apply to the Court for an order enabling either attachment of earnings or deductions from social welfare payments, as appropriate. The purpose of the Act is to facilitate a creditor in the recovery of monies from a debtor who can pay but won’t pay.
It should however be noted that “debt” under this Act does not include a debt for the repayment of a loan provided to the debtor by a bank, credit union or other entity regulated by the Central Bank of Ireland, moneylender, or credit card debt. The Act also abolishes imprisonment of debtors.
Once judgment has been obtained, a creditor can make an application to court under section 5 of the Act where the claim is for a sum not less than €500 but not exceeding €4000. The application to court must be made on notice as per the rules of court, and shall be accompanied by a copy of the judgment concerned or other evidence of the granting of the said judgment together with a statement by the judgment creditor of the amount of the judgment that remains outstanding.
The judgment debtor must then complete and produce to the court a statement of means. The judgment debtor must set out the following:
- Particulars of their earnings.
- Name and address of every employer and particulars to enable employers to identify the judgment debtor.
- Any income including welfare benefits.
- Aggregate amount of all liabilities of the judgment debtor.
- Whether liabilities arise on foot of a court order and the particulars of same.
- Any deductions from earnings (e.g. local property tax) and particulars of same.
- Whether the judgment debtor entered into an insolvency arrangement.
- Must obtain a verifying certificate from the Minister for Social Protection verifying payments. This must be attached to the statement of means. This certificate will not be disclosed by the court to the creditor.
- The court can also request that the judgment debtor produce additional information if necessary.
A person who gives a statement that is false or misleading will be liable on summary conviction to a fine at rates set out within section 23 (1) (2) and (3) of the Act.
Proceedings will be adjourned if the judgment debtor is able to show that the debt will be discharged within a reasonable period, however, the court can also attach conditions with regard to payment.
The court is not entitled to make both an attachment of earnings order and a deduction from payments order in respect of the same judgment debt if they are to have effect at the same time.
Attachment of Earnings Order
The court on application must be satisfied with the proofs before it can make an order directing the employer to deduct from the judgment debtors earnings. The court will specify the amount to be deducted and the period of such deductions.
In advance of making the attachment order, the court will afford the judgment debtor the opportunity to make representations in respect of the debt.
The court will also consider the following:
- Normal Deduction Rate – A rate not exceeding the rate that appears to the court to be necessary.
- Protected Earnings Rate – A rate that should not be reduced beyond that which would affect the particular needs / circumstances of the judgment debtor.
Once the attachment order is made it will then be served on the judgment debtor and the employer of the judgment debtor by the clerk of the court.
Once served, the judgment debtor is not obliged to comply with the order for a period of 10 days. The employer (or person to whom the order is directed) shall give the judgment debtor notice in writing of the total amount of every deduction made for the judgment debtors earnings. If the employer ceases to be the employer then the order lapses. If the order lapses it only lapses against that particular employer and will remain in force for other purposes.
Where the attachment order is in place and there is a change in circumstance for the judgment debtor, the judgment debtor must notify the judgment creditor where:
- Earnings have increased by more than €50.00.
- Where the judgment debtor leaves the current place of employment.
New employers, once on notice of the order, must within 10 days of becoming the new employer, notify the court and the judgment creditor in writing of the new status of the judgment debtor. The new employer must also set out the judgment debtors earnings from the relevant employment.
Deduction from Payments Order
The court has the power to direct the Minister for Social Protection to:
- Deduct from the net scheme payments payable to the judgment debtor.
- Pay the amounts deducted to the judgment creditor.
In advance of making the order the court shall give the judgment debtor the opportunity to make representations in respect of the debt. The deduction from payments order will set out the criteria for repayment and it will include the amount to be deducted and the period over which the deductions are to take place.
On making the order, the court will direct the judgment debtor to furnish his or her PPS number and a copy of the order to the Minister for Social Protection.
Once the deductions from payments order is served upon the Minister for Social Protection, the Minister shall make the necessary deductions payable to the judgment debtor and pay same to the judgment creditor. The Minister will not be entitled to reduce the payments below the monetary values specified in column (2) of Part 1 of Schedule 4 of the Social Welfare Consolidation Act 2005.
Where the deductions from payments order is in force against the judgment debtor, the judgment debtor must notify the judgment creditor where:
- Earnings have increased by more than €50.00.
- Where the judgment debtor becomes employed and particulars of expected earnings should be specified.
Variation of Order
A judgment debtor or creditor can apply to vary the order in force where circumstances have changed. The application to vary the order must be made on notice to all parties including the Minister for Social Protection. The court also has the power to discharge the order where it is satisfied that the judgment debtor does not possess the means to satisfy the order.
If the judgment debtor pays the full balance the order shall cease to have effect and the judgment creditor must notify the employer or Minister for Social Protection.
The Act expands the current range of enforcement options available to creditors and it primarily places emphasis on debtors who can pay their bills but won’t pay.
The Act itself has not yet come into operation however it will do so “on such day or days as may be fixed by order or orders made by the Minister, either generally or by reference to any particular purpose or provision, and different days may be so fixed for different purposes and different provisions” (S27 (1) ).
For further information on the Civil Debt Procedure Act, please contact Richard O’Sullivan.
