New Personal Insolvency Law in Ireland-The Essentials

The heads of the new Personal Insolvency Bill were published this week and provide major changes in how personal and other debt can be dealt with in the future in Ireland. The antiquated Bankruptcy laws in Ireland will be significantly overhauled when the Personal Insolvency legislation becomes law later in the year.

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It is intended to publish the full bill before the end of April as agreed with the EU/IMF “troika” and it will come into law either before (unlikely) or after the summer Dail recess.

The new law, when passed, will see

  • The bankruptcy period in Ireland being reduced from 12 years to 3 years
  • The setting up of a State run insolvency service intended to help people manage their debt
  • The setting up of three non-judicial voluntary debt settlement procedures.

Voluntary debt settlement procedures

Three new debt settlement procedures are envisaged:

1. Debt relief certification for people with debts (unsecured, for example credit cards) of up to €20,000 in unsecured debt. If you meet the criteria to qualify for this debt relief certificate your debt will be frozen for one year and then written off (provided your financial circumstances have not improved). You apply for this certificate from the proposed Insolvency Service and your net disposable monthly income must be less than €60 and your net assets are less than €400 (apart from the concession of being able to have a car worth less than €1,200).

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2. Debt settlement for people with unsecured debts of in excess of €20,000 which will involve the assistance of a personal insolvency trustee and a write off of some of the debt over a 5 year period. This is a debt settlement arrangement and involves an application for a Protection Certificate which stops creditors from taking any action against you for 30 days. 65% of your creditors must agree to the proposed payment plan and if agreed the arrangement will be recorded on an insolvency register. If you stick to the arrangement for 5 years your debts under the arrangement will be discharged.

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3. Personal insolvency arrangements (PIA)- this will cover both secured and unsecured debt and will be of great assistance to homeowners in difficulty with mortgage debt. The PIA is for people with debts, both secured and unsecured, of between €20,000 and €3,000,000.

 

This arrangement will see a personal insolvency trustee assist the borrower to do a deal with creditors and oversee the repayment plan for a period of 6 years. To avail of this option you need to be able to prove that you are insolvent and are likely to remain insolvent and the application for a protection certificate from the Insolvency Service. This arrangement will depend on the agreement of unsecured (55%) and secured (75%) of the creditors. The bank, the most likely secured creditor, may be persuaded to agree as the stick for the banks in the Personal Insolvency Bill is the new bankruptcy law which will only endure for 3 years, not the current 12.

 

Judicial bankruptcy

This will involve a petition to Court to go bankrupt and will see all of your property come under the control of an Official Assignee appointed by the Court. Any income you earn in excess of your living expenses will be used by the Official Assignee to pay your creditors. You will be discharged from bankruptcy after 3 years provided you have been co-operative and honest, although the Court does have the power to order you to make payments for a further 5 years. This new law will also prevent a creditor owed less than €20,000 petitioning the Court for your bankruptcy.

 

There is no doubt that the new Personal Insolvency law, when it comes into force, will provide some much needed relief to people struggling with unpayable debts. The role and attitude of the banks to this proposed law is unclear at the moment and the leading banks have been uncharacteristically quiet in their response. Their willingness to recognise the reality of the current debt situation for many people will be a significant factor in the success of this law.

Filed Under: Debt Problems | Bankruptcy Tagged With: , , , ,

10 Methods of Enforcement of Judgments in Ireland

Once you have obtained your judgment against a debtor there are a number of avenues open to you to attempt to enforce that judgment including

  1. Judgment mortgage
  2. Execution orders
  3. Attachment and committal
  4. Garnishee order (attachment of debts)
  5. Appointment of  a receiver
  6. Charging order over shares
  7. Order for possession and delivery up
  8. Sequestration
  9. Charging a partner’s interest.
  10. Bankruptcy

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Judgment mortgage

If the debtor is a property owner it may be possible to register a judgment mortgage against their property. However you do need to check that there is equity in the property as there may be other creditors ahead of you in the queue.

Read more about judgment mortgages.

Execution orders

Execution orders, also known as “fieri facias” or “fi fa”, is the most common method of enforcement and utilizes sheriffs to attempt to seize goods of the debtor.

You will firstly need to obtain an execution order, either from the High Court or District Court and send it to the Sheriff for execution.

There are 2 independent Sheriffs in Dublin and Cork; in the other counties the County Registrar carries out the functions of a sheriff.

A sheriff has the powers of

  • seizure of moveable goods (but not goods on lease or hire purchase)
  • right of entry onto premises provided he does so peacefully and believes that there are goods on the premises.

An execution order from the District Court is valid for 6 years; from other Courts the period is 1 year.

If the sheriff is unable to seize goods he will return the execution order and mark it “no goods” or “nulla bona”.

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Attachment and committal

It is possible to apply to the District Court to obtain an order for committal of the debtor to prison for failure to comply with an instalment order.

However this whole area has changed since the decision in the Caroline McCann v The Judge of the District Court and others with Monaghan Credit Union Limited case by Ms. Justice Laffoy where Flac challenged the constitutionality of imprisoning a debtor for failure to pay.

The finding of unconstitutionality of section 6 of the Enforcement of Courts Orders Act 1940 has led to a change in the law and basically a debtor is unlikely to be sent to prison now for inability to pay (as opposed to an unwillingness to pay).

Garnishee order (attachment of debts)

If a debtor has monies due and owing to him but has no goods it is possible for a creditor to obtain an order for attachment of debts to have repayment of the debt repaid to him instead of the debtor.

This type of order would cover

  • wages due to the debtor
  • a credit balance in the debtor’s bank account
  • other debts due to the debtor.

Appointment of a receiver

The Circuit or High Court has the power to appoint a receiver over the property of a debtor, selling it and paying the proceeds to the creditor. This method is entirely at the discretion of the Court as it is an equitable remedy.

Charging shares and stocks

This involves getting a charge on government securities or shares registered in the debtor’s name and ordering a transfer of those shares to the creditor.

Order for possession

This order applies where the creditor seeks to recover property other than money or land, for example goods and chattels. This too is an order at the discretion of the Court with no automatic right to the creditor.

Sequestration

This is an order against a person or company who has not complied with an injunction but can also be used to enforce a judgment.

Charging a partner’s interest

This comes about where the debtor is in a partnership and this gives the creditor priority over other creditors of the partnership.

Bankruptcy

Bankruptcy in Ireland is a “nuclear option” and is expensive for the creditor with an outcome that may not see you enforcing your judgment in a satisfactory manner if recoupment of monies owed is the priority.

There are a number of options under the heading of bankruptcy including a private arrangement under the control of the Court and an arrangement outside the control of the Court.

Filed Under: Debt Problems | Bankruptcy Tagged With:

The European Order for Payment Regulation Procedure

The European Order for Payment Regulation is an attempt to put in place an EU wide procedure for inter EU state debts. The whole purpose of the regulation was to put in place a uniform procedure across member states for the collection of uncontested debts.
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It is an additional procedure to existing home state procedures and the obtaining of a European Enforcement Order in the creditor’s home state.

Conditions for issuing of an EOP

To obtain an EOP

  1. The debt must be inter-state,
  2. Must be an uncontested claim for a discrete amount of money.

In Ireland the application is made to the Master of the High Court and the order is made on the basis of the affidavit sworn by the creditor.

Once the order is granted it must be served on the debtor; if the debtor does not pay the amount due he has 30 days to lodge a Statement of Opposition.

If he lodges the Statement of Opposition the case proceeds in the courts of the state in which the European Order for Payment.

If he does not lodge a Statement of Opposition then the Master issues a Declaration of Enforceability which means the order is enforceable in all member states of the EU.

However a member state may refuse to enforce a European Order for Payment in specific circumstances such as where the order is irreconcilable with an earlier decision given in any member state in relation to the same case.

Filed Under: Debt Problems | Bankruptcy, Transnational Litigation Tagged With:

Enforcing UK Debt in Ireland-Debt Collection in Ireland for UK Creditors

If you have secured a judgment in the UK in respect of a debt but find that your debtor is now living in Ireland, how do you enforce your debt?


Article 33 of the Brussels I regulation stipulates that any judgment obtained in a member state will be recognised in other member states without any special procedure required.

But how do you enforce your UK judgment in Ireland?

Order 42A of the Rules of the Superoir Courts in Ireland provides the procedure which involves making an application to the Master of the High Court in the first instance.

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This is an ex parte application (only one party required, there is no need to serve any papers on the debtor at this stage). Your application needs to be supported by an affidavit which shows

  1. Your UK judgment,
  2. If the judgment in the UK was obtained by default you will need to demonstrate that the debtor was properly served in the UK with the legal proceedings in the first place,
  3. Documents that show that the judgment obtained in the UK is enforceable and has been served,
  4. An Annex V certificate which will be provided by Court officials in the UK.

There are a number of other averments or statements which will need to be in your affidavit including an address in Ireland for the service of documents on the party making the application and the grounds on which the right to enforce the judgment is vested in the party making the application.

 

Declaration of enforceability

Provided your papers are in order and your application is successful then the Master of the High Court will declare your UK judgement enforceable immediately.

Once this declaration of enforceability is granted it affords the same power to the UK judgment as if it was a judgment made in the High Court in Ireland.

This declaration of enforceability then needs to be served on the debtor along with the Judgment and a Notice of Enforcement.

At this stage the debtor has a period of time within which to appeal the Master’s order which can range from 1 month to 2 months.

Only after this period has expired will the Execution Order in respect of your Judgment issue.

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UK Judgment not recognised

A UK or EU judgment will not be recognised in Ireland in only a narrow range of circumstances with the most common situation being where the original proceedings were not correctly served on the debtor.

 

Should you need any assistance in Ireland with having your UK judgment recognised and enforced in Ireland we are happy to assist-please use the Contact Us form with your query.

Filed Under: Debt Problems | Bankruptcy, Transnational Litigation Tagged With: , ,

Repossessions of Properties Halted by High Court Judgment

Many hard pressed homeowners, fearful of losing their homes as a result of being unable to repay their mortgages, have been handed a lifeline by a High Court decision in July 2011 by Ms Justice Dunne.

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Background

Prior to the implementation of the Land and Conveyancing Law Reform Act 2009  lenders relied upon section 62(7) of the Registration of Title Act 1964 to apply to Court to seek a possession order when the borrower had defaulted on his loan.

The decision of Ms Justice Dunne that section 8 of the Land and Conveyancing Law Reform Act 2009   repealed section 62(7) of the Registration of Title Act 1964 means that lenders can no longer rely on section 62(7).

Since the Land and Conveyancing Law Reform Act 2009 came into effect on the 1st of December, 2009 the consequences of this decision and section 8 of the  Land and Conveyancing Law Reform Act 2009 are as follows:

  1. There is no right to apply to Court for an order for possession of property where the borrower entered into the mortgage prior to 1st December, 2009 and have fallen into difficulties after this date.
  2. The Land and Conveyancing Law Reform Act 2009 does contain provisions (in Chapter 3) similar to section 62(7) of the Registration of Title Act 1964 but this will only be of use to lenders and banks in respect of mortgages taken out after 1st December, 2009.

The implications of this decision are far reaching as many of the mortgages which would now be in difficulty would have been taken out prior to 1st December, 2009.

The decision of Justice Dunne arose when four cases, in which orders for possession were sought, were heard together-

  • GE Capital Woodchester Homeloans Limited v Michael and Sinead Grogan
  • GE Capital Woodchester Homeloans Limited v Colm Mulkerrins
  • Secured Property Loans Limited v Tom Clair and Mary Clair
  • Start Mortgages Limited v Robert Gunn and Maura Gunn [2011 IEHC 275].

The details of each case above were slightly different but all four cases involved the mortgage being taken our prior to 1st December, 2009.

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Effect of High Court decision

The net effect of the decision in these cases is:

  1. Where the mortgage was taken out prior to 1st Dec. 2009 and go into default after that date the bank has no legal right to seek possession;
  2. Where the mortgage was taken out prior to 1st December, 2009 and no letter of demand was issued prior to this date there is no right to seek possession;
  3. Where the mortgage was taken out prior to 1st December, 2009 and legal proceedings were initiated prior to this date the bank can seek an order for possession;
  4. Where the mortgage was taken out prior to 1st December 2009 and the letter of demand for payment was sent out prior to this date the bank can seek an order for possession.

 

For the many people who are affected by this decision they now have more time to negotiate with their lender and more time in which to sell their property.

They may also find the lender more amenable to a “deal” as the bank will face the difficulty of being unable to seek an order for possession in these cases without the necessary amending legislation.

And in the current economic climate it could be argued that it would be a brave (or foolish) politician who would champion the necessary amending legislation.

Alternative Approach by Banks

Notwithstanding the decision above there is an argument to be made that the banks will not be completely stymied by this decision but may in fact have a legal cause of action arising from a simple breach of contract (the mortgage contract). It has been held by the High Court in the past (Gale v FNBS, 1984) that a mortgage contract gives the lender a contractual licence to enter and take possession of the property.

As with all matters to do with the law consult your solicitor for his/her advices for your particular circumstances.


Filed Under: Debt Problems | Bankruptcy, Property Law Tagged With: , , ,

Enforcement of U.S. Judgments in Ireland

Unlike procedures laid down under the Brussels I Regulation or Lugano Convention for the enforcement of judgments between EU member states there is no formal procedure in the Rules of the Superior Courts in Ireland for the enforcement of judgements from non EU countries such as the United States.


Strictly speaking the procedure therefore is that if you have obtained a judgment in the United States for example, you are obliged to commence proceedings anew in Ireland under the Summary Summons procedure.

However the Irish Courts can enforce a non EU judgment under the common law rules of enforcement. To be successful with an application for recognition of a non EU judgment the following are fundamental-

1. The judgment must be for a definite monetary sum

2. The judgment that was obtained must be conclusive and final

3. The Defendant had adequate time to defend the proceedings and must have been served with them

4. The judgment must not be irreconcilable with public policy in Ireland

5. The judgment was not obtained by deceit or fraud

6. The Court that issued the judgment must have had jurisdiction to have dealt with the dispute-it must have been a Court of Competent Jurisdiction

 

The Defendant could have submitted to the jurisdiction of the foreign Court as a matter of contract or by entering an Appearance to the proceedings.

 

The action then to enforce the US judgement is one taken at common law and the cause of action is recognition of the foreign judgment.

The question of competence of jurisdiction is an important one and it is not enough to show that the foreign Court had jurisdiction according to the conflict of jurisdiction rules in the foreign country; it must be shown that the Court was one of competent jurisdiction according to the Irish conflicts of laws rules.

 

An alternative way to recover a foreign judgment against an Irish debtor is to bring bankruptcy proceedings in Ireland against the debtor with the first step being to serve a demand for payment on the debtor. (Read how to make a debtor bankrupt also)

Filed Under: Debt Problems | Bankruptcy, Transnational Litigation Tagged With: ,

Recognition and Enforcement of Judgments between EU States

The recognition and enforcement of judgments between EU member states is dealt with under the Brussels I regulation, specifically articles 30 to 56. In fact article 33 states that  a judgment obtained in one EU member state will be recognised in other member states as a matter of course.

However this recognition will not be of much benefit to you if you are not able to enforce your Judgment in Ireland against the assets of an Irish debtor.

 

Order 42A of the Rules of the Superior Courts in Ireland sets out the procedure to have a foreign judgment enforced in Ireland and it involves an application to the Master of the High Court who is the designated authority.

 

To make such an application it will be necessary to swear a grounding affidavit which will exhibit the judgement which you wish to have enforced and proof that the judgment is enforceable in the state in which it was given.

 

This affidavit will also need to provide an address in Ireland for the service of documents on you as applicant.

 

If judgment was given in default of Appearance or Defence you will need to show proof of service of necessary documents on the defendant.

 

In addition you will need to produce an Annex V Certificate which is a certificate provided by court officials in the state in which judgment was granted and which sets out certain details concerning  the case and judgment.

 

Declaration of enforceability

Once the necessary documents above have been filed and exhibited the Master of the High Court will issue a Declaration of Enforceability which has the same effect as a Judgment of the High Court in Ireland.

 

A Notice of Enforcement is then served on the Defendant along with the order of the Master. The Master’s Order will contain a time period within which the debtor can appeal the decision, generally 1 month.

 

Defences to enforcement of EU judgments

Article 34 provides some defences to having a judgment from antother EU state enforced in Ireland or any other state for that matter. These include:

1. If recognition of the judgment would be contrary to public policy in the state in which application is made

2. If the debtor was not served with documents and the judgment is in default of appearance or defence

3. If it is irreconcilable with other judgments granted in the dispute between the parties

Generally the most common problem is 2 above where the originating summons was not served on the defendant.

Filed Under: Debt Problems | Bankruptcy, Transnational Litigation Tagged With: , ,

Service of Foreign Process in Ireland for Non EU Countries

The service of foreign process in Ireland for documents originating in non-EU countries must be carried out under the procedure laid down in the Hague Convention of 1965 which dealt with the service of judicial and extrajudicial documents in Civil or Criminal matters abroad.

Many law firms, banks and others find it more cost effective to engage the services of process servers in whichever jurisdiction is relevant.

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Please note this Hague Convention only applies to signatories of the Hague convention and non EU countries; service between EU countries is covered by the Brussels I regulation, the Brussels convention or the Lugano convention.

 

So the procedure discussed here would apply if you were an American or Australian company or bank for example seeking to have documents served in Ireland on an Irish defendant.

The Hague convention rules which cover this area were given effect in the Rules of the Superior Courts in Ireland under statutory instrument 101/1994.

These rules deem the Master of the High Court to be the Central Authority in Ireland.

The procedure involves you as a judicial officer in, say, the United States filling out a form which is annexed to the Hague Convention which is called a Request form.

You can access the request form here.

(Do note that if the request is not a Hague convention request and is not in English then the request and documents will have to be translated into one of the two official languages of the Irish State-English or Irish-and two copies of all documents will have to be provided)

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The form is in fact in 3 parts-Request, Certificate and Summary.

If the request is a Hague Convention request from a Convention country then the Request form is left in with the Central Office of the High Court and if the Central Authority is satisfied that the Request is in conformance with the Hague Convention then the Central Authority generally directs service in the manner requested by the applicant unless this method is incompatible with the laws of Ireland or is not in compliance with the practice and procedure of the High Court.

If the Central Authority is not satisfied with the Request it can set out it’s objections to allow the applicant rectify the matter.

If there is no specific method of service requested by the applicant the Central Authority will direct personal service on the Defendant. If this is the case the Central Authority may direct service by the Chief Solicitor’s office.

Process server

Service is then carried out by delivery and leaving with the Defendant one copy of the documents to be served and any translation if appropriate.

Once service is then effected by the process server he/she returns to the Central Authority with one copy of the process and an Affidavit setting out how service was carried out.

This affidavit sets out how service was effected.

The Central Authority may stipulate a time period within which service is to be effected.

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If and when the Central Authority is satisfied with service it will issue a certificate to this effect which will be your proof of service under the procedure laid down in the Hague Convention-this Certificate is part 2 of the Request form which you can access above.

Process servers in Ireland

Terry Gorry & Co. Solicitors provides process serving services for a growing number of international clients.

Our membership of the Law Society of Ireland, understanding of the laws applicable in Ireland and the Rules of the Superior Courts, ensures that our clients receive a professional service from start to finish.
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Read about service within Europe between EU states, jurisdiction and service of legal documents also.

For a quotation within 24 hours for service in Ireland please fill out the form below.

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Request a Quotation for Process Service in Ireland

Filed Under: Debt Problems | Bankruptcy, Transnational Litigation Tagged With: , , , ,

Some Consequences of Bankruptcy in Ireland

Before looking at the aftermath of consequences of bankruptcy in Ireland lets firstly look at the bankruptcy procedure in general terms to get some background.


Bankruptcy proceedings are all dealt with in the High Court, which has obvious cost implications, and if you are declared bankrupt it lasts until and after your death unless you are discharged.

Getting a discharge from bankruptcy is difficult as you must firstly pay off all charges and costs incurred in making you bankrupt in the first place. In fact before a bankrupt can be discharged he/she must discharge the costs of the petitioning creditor, the High Court fees, the costs of the Official Assignee and any preferential debts of the debtor.

A bankrupt is entered on the bankrupt register which is maintained by the Examiner of the High Court-this cannot be inspected online but can be inspected by paying a small fee and calling in person or writing to the Office of the Examiner of the High Court.

After bankruptcy

After being adjudicated bankrupt the petitioning creditor must advertise this fact in a national and local newspaper. Other advertisements will also be required from time to time such as advertising for creditors to come forward.

Once made bankrupt all property vests in the Official Assignee who then attempts to sell the property.

Consequences of bankruptcy

A bankrupt can operate a bank account and trade in a business under his own name but cannot be a company director; he/she can continue working and/or seek employment.

A bankrupt’s interest in the family home will vest in the Official Assignee when adjudicated bankrupt.
However the Official Assignee can only sell the family home with the approval of the High Court.
Note though that if there is a mortgage or charge on the property only the equity in the property, the unencumbered part, will transfer to the Official Assignee.

A bankruptcy will also cause a joint ownership to split so if the bankrupt owns a family home (or other property) with a partner/wife/husband then the Official Assignee and the non-bankrupt person will hold separate interests in the same property.

Filed Under: Debt Problems | Bankruptcy Tagged With: ,

How To Make A Debtor Bankrupt

To make a debtor bankrupt you must prove the debt and that the debtor has engaged in an act of bankruptcy which would involve failing to respond to a Bankruptcy Summons or having a “nulla bona” (no goods) returned on an Execution Order which the Sheriff would have tried to execute on foot of a judgment.



The act of bankruptcy must have occurred within the preceding 3 months of the petition.

To petition for bankruptcy these conditions must be present-

1. The debtor must be resident in Ireland or have lived here within 1 year of the petition or have a house or business in the State within 1 year prior to petition
2. The debt must be at least €1,900
3. Petition must be presented within 3 months of the act of bankruptcy
4. The amount of debt must be sworn on affidavit

Petitioning for the bankruptcy of a creditor will involve advertising the court sitting in at least one national newspaper and discharging the costs of the Official Assignee who is the Court appointed person to whom the bankrupt person’s assets, if any, are transferred.

It will also involve lodging €650 with the Office of the Official Assignee in respect of his costs/outlays in the first instance.

When a person is adjudged bankrupt their property and assets are transferred to a court appointed trustee who is nearly always an official from the office of the Official Assignee who then looks after the estate of the bankrupt.

Secured creditors in bankruptcy

A secured creditor who holds a judgment or mortgage on a property can rely on this security and sell the property but must account to the Official Assignee in respect of the sale with any surplus being paid to the Official Assignee.

The legislation covering bankruptcy in Ireland is the Bankruptcy Act, 1988 and Statutory Instrument 79 of 1989 which is reflected in Order 76 of the Rules of the Superior Courts in Ireland.

Filed Under: Debt Problems | Bankruptcy Tagged With: ,
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